Chinese Refiners Buy Rare North Sea, Guyana Crude at Low Prices

Shu Zhang
Tuesday, April 7, 2020

Chinese independent refiners have snapped up rare crude grades from the North Sea and Guyana at low prices in an oversupplied market after the coronavirus pandemic destroyed demand, four sources with knowledge of the matter said on Tuesday.

The North Sea grades bought included Balder, Flotta, and Chestnut crude, while Guyana's Liza crude was sold into China for the first time, the sources told Reuters.

"We are seeing these grades for the first time," one of the sources said. "They have no demand in their local markets and have to be sold out of their regions."

Traders are offering a wide variety of crude grades from all over the world into top importer China as its refiners ramp up operations amid a gradual recovery after a near 3-month lockdown to curb the spread of the coronavirus.

The opportunity for these Chinese buyers, commonly known as teapots, to snap up supplies at low prices came as the rest of the world started curbs, sharply reducing fuel demand.

Balder and Liza were sold at spot discounts of $7.30-$7.50 to ICE Brent for July arrival, while Flotta crude was sold at a discount of close to $7.00 to ICE Brent for late June arrival, the sources said. The price for Chestnut crude was not immediately available.

"When new grades enter a market, normally they are being sold cheaply," said the second one of the sources. "These are absolute bargains and absolutely worth buy... It would be a pity not to pick up the cheap barrels."

These low-sulphur grades are also good substitutes to popular ones such as Russia's ESPO crude and Brazil's Lula crude, which were still offered by traders at comparatively higher spot differentials in the China market, the sources said.

Independent refiners collectively account for a fifth of China's crude imports and their purchases are restricted by quotas.

Buyers are now waiting for the second batch of quotas which could be issued in the second half of April, two Chinese refining sources said. 

(Reporting by Shu Zhang; Additional reporting by Florence Tan; Editing by Edmund Blair and Peter Graff)

Categories: Energy North Sea Activity Europe Production South America Asia China

Related Stories

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Turkey Discovers New Black Sea Gas Reserve

EnQuest Bags Two Production Sharing Contracts off Indonesia

Hanwha Drilling’s Tidal Action Drillship En Route to Petrobras’ Roncador Field

CNOOC Puts Into Production New Oil Field in South China Sea

Petrovietnam, Petronas Extend PSC for Offshore Block

Hanwha Ocean Marks Entry into Deepwater Drilling Market with First Drillship

All Gas from Conrad’s Mako Field to be Sold to Indonesia’s PLN

Current News

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com