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Singapore: FAL Oil, a UAE-based trading firm, has bought a 270,000-tonne fuel oil cargo from Venezuela for a rare shipment to the Middle East, traders and shipbrokers said yesterday.
The company, a major player in the Fujairah marine fuels market, has booked the very large carrier (VLCC) Crude Sun, to load the 380-centistoke (cst) fuel oil cargo on January 6 from the Bahamas, trade and shipping sources said.
"This is the first time we have seen these Venezuelan cargoes going elsewhere besides China, and we're still wondering what the logic would be for them to take such a large cargo into Fujairah," a Singapore-based fuel oil trader said.
Venezuelan grade fuel oil, typically 380-cst grade and with a high metals content, is normally funnelled into China's bunker fuel market, as well as blended with off-specification diesel to make utility grade cargoes.
"The Crude Sun has been in the spotlight quite a bit recently, having been taken provisionally on a few occasions, but it has finally been confirmed for FAL Oil to load from the Caribbean," a Singapore-based shipbroker said.
The VLCC was booked for about $9 million or roughly $33 a tonne, shipbrokers said. Other price details were not immediately available on the cargo, but traders said that fuel oil from Venezuela was being valued at a discount of about $35 to Singapore spot quotes, free-on-board (FOB) basis.
Supply line
At least one Middle East-based trader said FAL Oil could be pumping the cargo into one of its newly acquired floating storage vessels. "They could be bringing the cargo in to fill up their latest floating storage vessel, but again this is speculation. We'll have to wait and see what they eventually end up doing with the cargo," the trader added.
Some traders and ship-owners said there was no anticipated shortage of bunker fuel supply at Fujairah port, a key ship refuelling hub, located on the Gulf of Oman just outside the Strait of Hormuz. "There doesn't seem to be any problems with supply in the medium term over there," said a Singapore-bunker trader familiar with Fujairah bunker sales.
Fujairah, the world's second-largest marine fuels port, had a turnover of about 10-11 million tonnes in 2006. Marine grade fuel oil prices at Fujairah have been pegged at about $470 a tonne, some $5 lower than Singapore's settlement price on Friday.
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