Supertankers Set to Take North Sea Crude to Asia in June
As many as four VLCC tankers could take North Sea crude oil to Asia this month, shipping fixtures show, after an Atlantic Basin supply glut forced prices to multi-year lows.
The Samco Europe, Bunga Kasturi Empat, Britanis and Starlight Venture VLCCs - very large crude carriers - have been lined up for the shipments, according to the fixtures, equivalent to around 8.4 million barrels of Forties crude oil.
The tankers have been booked by Unipec, Glencore's shipping arm ST Shipping, Trafigura and Vitol respectively.
Unipec's tanker is listed as heading for Singapore, but the other three are expected to head for South Korea, which benefits from freight rebates and a free trade agreement with Europe. Both of these measures encourage local refiners to diversify their crude imports.
Traders had suggested that four VLCCs might sail in June as far back as May 14, citing strong Asian demand, but fixtures were slow to emerge.
Asia has been a steady buyer of North Sea oil this year, with crude heading to China, Thailand and Taiwan as well as South Korea.
The sudden rise in bookings in June is partly related to the fact that the VLCC jetty at the North Sea Forties loading terminal of Hound Point was closed for maintenance between May 6 and June 8.
But it is also a reflection of the ongoing oversupply of both North Sea and West African crudes, which has meant some cargoes have struggled to find homes in Europe, even with refineries pumping hard to take advantage of strong margins.
"Refineries should be pulling as much as they can, but Forties has been at multi-year lows," said Olivier Jakob, an oil analyst at Petromatrix in Switzerland.
Forties traded at its lowest level since December 2008 in late May, and Ekofisk crude traded at a nine-year low as sellers were forced to slash prices to offload unwanted cargoes.
Jakob said the problem had started with an overhang of competing West African barrels, which worsened in May.
This oil tried to find a home in Europe, displacing some of the North Sea barrels and resulting in a build-up of crude on the water. "There's a large amount of crude afloat in tankers, and it needs to be pushed somewhere," he said.
Ship tracking data shows that as many as six aframaxes and one suezmax are still waiting at anchor off the coast of Britain. These ships loaded with Forties and Ekofisk weeks ago, but the crude has yet to find a buyer.
Unipec's Samco Europe part-loaded with Forties at Hound Point on Friday, but looks set to take oil from two of these aframaxes - the Thornbury and British Falcon - which were also chartered by Unipec.
Traders also pointed out that North Sea crude has been booked to go to Latin America and the U.S. Gulf Coast over the past week, another sign that differentials have dropped to such weak levels that new buyers have been attracted.
BP has lined up the suezmax Mikela P to take Ekofisk to Uruguay following an ANCAP buy tender for July delivery. Traders said such shipments to Latin America were rare, although Chile has been a buyer of North Sea crude in the past.
"There is too much supply in Europe, sellers are trying to take it far away," a trader said.
(By Claire Milhench)