Aramco to begin H2 08 naphtha term talks soon

14 May 2008 05:18  [Source: ICIS news]

SINGAPORE (ICIS news)--Saudi Arabian Oil Co (Aramco) will begin its term naphtha negotiations with Asian customers for the second half of 2008 next week in London, industry sources said on Wednesday.

The term contract would cover deliveries between July-December 2008 for its A-180, Rabigh, Jubail and A-310 grades. The volume on offer for each of the grades could not be ascertained.

Last year, the July-December 2007 contract for the A-180 and Jubail grades were set at premiums of $25/tonne and $20.50/tonne against its price formula.

The high premiums had led some buyers to reduce their purchase volumes or opt out of their term purchases completely by turning to spot supplies instead.

Aramco, the biggest Middle Eastern naphtha supplier to Asia, had earlier set the price for its A-180 naphtha grade at a premium of $12/tonne to the Aramco formula for its term supplies over October 2007 to March 2008.

In related news, Abu Dhabi National Oil Co (Adnoc) recently concluded its June-December 2008 term naphtha deals at premiums that were above market expectations, prompting some end users to drop out or reduce lifting volumes. The premium for its pentane-plus naphtha grade was set at $21/tonne above Middle East spot quotes.  

"If they offer too high a premium, then buyers will opt out and turn to spot cargoes. Anyway, the market is depressed at this moment and flushed with ample supplies following the outage at YNCC’s naphtha crackers," a source said.

Apart from Aramco, other key suppliers of naphtha from the Middle East to Asia are Kuwait Petroleum Corp, Adnoc and Bahrain Petroleum.

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By: Desmond Chia
+65 6780 4359

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