SINGAPORE May 24 (Reuters) – PV Trans, the transportation arm of PetroVietnam, plans to charter some tankers to store Bach Ho crude following an outage at the country’s sole refinery, trade sources said on Thursday.
The sudden surge in Bach Ho exports has dampened sentiment in Asia’s sweet crude market as it added to unsold supply accumulated in previous months amid weak demand from refiners due to poor naphtha cracks. Demand from Japanese utilities, which burn Bach Ho at their power plants, was also weak as peak summer electricity consumption has yet to kick in.
PV Trans is looking to charter two Aframaxes or three medium range-sized tankers on a spot basis, one of the sources said, adding that these can store 900,000-1.2 million barrels of crude.
PV Oil, the trading arm of PetroVietnam, is expected to have close to 2 million barrels of Bach Ho crude for sale in May after the country’s 130,500 barrels-per-day (bpd) Dung Quat refinery was unexpectedly shut from mid-May, the sources said. Their estimate was based on Bach Ho daily production at 130,000-135,000 barrels.
The company has so far sold seven cargoes to load in June and July to Shell, Mitsui, Petrosummit, Itochu, Glencore and Gunvor, sources said, but it had difficulty selling the May supply as it was too prompt.
“Quite a few cargoes are in the hands of the traders,” a trader said, noting that demand was weak as end users would have bought these cargoes directly.
PV Oil may offer the May cargoes on a cost-and-freight basis to cover its storage costs, he added.