In Freight News 01/07/2016
Norway’s Statoil has claimed 10 percent of the highly coveted oil trade route between west Africa and China’s small ‘teapot’ refineries, its head of trading said, suggesting its gamble to offer directly to China’s newest importers has paid off.
China’s block of independent ‘teapot’ refiners became one of the most sought-after targets of oil exporters after the Chinese government late last year allowed them to import crude oil.
Statoil was one of the first players to target them, in a market crowded with sellers from every corner of the globe, by offering supertankers delivering to the port of Qingdao – a move closely watched by traders of West African oil.
By offering oil sales for delivery into Chinese ports, rather than the free-on-board sales that are typical on the market, some said Statoil accepted higher risks by chartering vessels without knowing for sure if it would be taken by buyers.
At least one private refiner last year failed to secure financing for importing cargoes, forcing it to back out of a purchase from other sellers, while other traders wondered whether Statoil burned its fingers after port congestion at Qingdao delayed shipments.
“We now have 10 percent of that market,” said Tor Martin Anfinnsen, Statoil’s senior vice president for marketing and trading.
Statoil’s strategy could pave the way for a new pricing structure for crude oil sales into China, traders said.
Anfinnsen said Statoil has plans to further increase its downstream trading operations. It is already one of the world’s biggest crude exporters, selling 644 million barrels last year.
Statoil’s trading arm made up around 70 percent of the oil company’s adjusted earnings after tax in 2015, Anfinnsen said.
Commenting on the British vote to leave the European Union on Friday he said the result of the referendum has increased volatility in the global crude market but demand and supply fundamentals have not been affected. Only a resulting slowdown in economic activity could have an impact on European demand for oil, he added.
Anfinnsen also said there was a chance of a return to backwardation in crude prices in the next six to 18 months as the supply and demand gap had started to tighten.
However, “they need to tighten quite a lot more before there’s a real risk of it flipping,” he said.
Source: Reuters (Reporting by Karolin Schaps and Libby George)
