12 May 2007 - 10:52
  • News Code: 104328

Saudi Aramco has notified its term customers of a cut in second-half naphtha supplies to divert cargoes to new domestic chemical operations due to start in the fourth quarter, industry sources said.

One Saudi Aramco source said there will be a ’slight’ cut in term supply volumes, but declined to specify the size of the reduction.

It was not immediately known how much Saudi Aramco supplies in the first half of this year to its term buyers including those from South Korea and Japan.

Sources said the cut came as Saudi Arabia needed to start supplying naphtha to a new styrene facility, which is owned by Saudi Chevron Phillips, from October, suggesting that there would be some cut in supplies from Jubail.

But one source at a North Asian petrochemical firm said the cut has been made to supplies from Ras Tanura.

Saudi Aramco supplies A-180 and A-300 grades from Ras Tanura and the full-range grade from Jubail and Rabigh. Aramco will start price negotiation for second-half 2007 supplies from May 21.

Another source at a South Korean petrochemical company said the new operation in Jubail will consume 30,000 barrels per day (bpd) of naphtha, which is about 300,000 tons for a quarter.

Traders expect Saudi Aramco to raise premiums for second-half term supplies, as Asian petrochemical firms need more naphtha after their recent expansions in the first half of this year.

Taiwan conglomerate Formosa Petrochemical will start later this month a new 1.2 million tonnes per year (tpy) naphtha cracker--the biggest in Asia--which will help push up naphtha values.

South Korean petrochemical firms LG Chem and Samsung Total Petrochemicals also expanded its crackers by 260,000 tpy and 200,000 tpy, respectively.

 

PIN/ REUTERS

News Code 104328

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