Saudi Aramco is in talks to buy 1.7mn barrels of gasoil to be delivered in May, Reuters has reported.
This is its largest spot requirement the Kingdom has had in recent months and will be used to meet a potential rise in domestic demand for power generation fuel in the coming summer season, when temperatures can reach up to 50 degrees Celsius, the report said.
The spot requirement, which comes even after the country added 800,000 barrels per day (bpd) of capacity in two new refineries over the last two years, is likely to fill an increase in domestic demand, traders told Reuters.
The agency reported that Saudi Aramco’s wholly-owned subsidiary– Products Trading Company (ATC) — issued a tender late last week for four cargos of 300,000 barrels of gasoil each.
The four cargos will be delivered to the key port of Jizan, where the Kingdom’s biggest economic city is planned, with another 500,000 barrels of the fuel ordered to arrive at Ras Tanura in the Eastern Province between 10th and 31st of May.
The tender was only open for two days, between 30th of April and 1st of May, but Aramco is still negotiating with potential suppliers, according to traders.
The Saudi oil giant is also yet to renew an annual term deal for the import of diesel with India’s Reliance Industries, but traders have suggested that the contract may not be renewed due to adequate domestic supply.
Saudi Arabia was once a top importer of gasoil during summer, but its reduced gasoil imports this year are expected to weigh on gasoil margins, traders said.
“They might instead just import 500 ppm sulphur gasoil during summer in the spot market and export the 10ppm sulphur diesel depending on economics,” one of them said.
