Cargill Inc. is in the process of shipping the first low-sulfur gas oil
or diesel cargo from Southeast Asia to Europe. Traders said the company had chartered a tanker called the Young Lady, which is on its maiden clean products voyage
, to lift a total of 680,000 barrels of gas oil from the Malacca II refinery
The Malaysian refinery is the only major refinery in Southeast Asia that
can produce high-quality diesel that meets tight United States CARB
and European EN590 specifications, traders said.
They said the rare opportunity to export gas oil to Europe emerged
because of multiple factors, including cheaper freight, closed arbitrage to the United States and low prices in the benchmark Singapore market
. The price of standard 0.5 percent-sulfur gas oil
in Singapore was hovering at $29.50 per barrel compared with July futures on the International Petroleum Exchange at $225 per ton, or $30 per barrel.
"The arb to Europe is not really open but because they (Cargill) managed to get such cheap freight, they are able to do it. They also got the cargoes at low premiums," a gas oil trader
said. Cargill officials could not be reached for comment.
Traders said Cargill had purchased a total of 440,000 barrels of diesel that met the U.S. CARB standard and 240,000 barrels of 0.05 percent-sulfur gas oil.