Turkey's OPET to trade distillates in Asia

SINGAPORE (Reuters) - Turkey's OPET, which began trading marine fuels in Singapore last year, plans to branch out into middle distillates and expand its fuel oil volumes in the growing Asian market, a senior official said.

The firm, which has the largest network of petrol stations in Turkey, aims to start off with jet fuel trading, mainly to supply the distillate-short country, following its joint-venture deal with Turkish Airlines (THYAO.IS), its Singapore managing director Ali Sarper said. "We are now looking at how best to supply jet fuel from Asia into the country for the joint-venture company (with Turkish Airlines)," Sarper said at the Reuters Global Energy Summit in Singapore.

"We in talks now and are looking at starting this sometime this year as the joint-venture kicks off on July 1."

Sarper said the Singapore office may also launch diesel trades, in concert with OPET's European counterpart, which has been trading the product and supplying it into Turkey since 1996.

Its London office trades some 100,000-120,000 metric tons of diesel a month from suppliers in the Mediterranean, Black Sea region and Asia, and accounting for about 40 percent of Turkey's requirements.

Its Singapore office will source for diesel across Asia, where new refineries from India to China are cranking up output.

The cargoes will be used more for trading than for supply into Turkey, which requires diesel with 0.1 percent sulphur content, a grade not commonly produced in Asia and faces government restrictions on blending in the country, Sarper said.

"We are still in the process of registering with counterparties for the entry into the distillates market and we should start within the next 12 months or so," he added.

TO EXPAND FUEL OIL TRADING

OPET, co-owned by Turkey's Koc Holding (KCHOL.IS), opened its Singapore office about two years ago and started supplying marine fuels last October. It raised its volumes to around 100,000 metric tons a month, placing it among medium-sized players such as Cargill, Arcadia and Koch Refining.

OPET brought its first fuel oil cargo, a 100,000-tonne high-viscosity lot from the Tupras (TUPRS.IS) refinery in Turkey to Singapore two months ago. It will bring a third for June arrival -- the 80,000-100,000 metric ton aframax, Alaskan Sea, booked for May 31 loading from Aliaga, shipping reports show.

Sarper said OPET, which recently hired former PetroChina fuel oil trader Low Leong Kai to make a trading team of two, aims to bring six to eight cargoes into Singapore this year and to expand its supply source to include arbitrage cargoes from Europe.

But OPET does not expect to lease any storage for fuel oil in the near-term due to current poor blending margins, in a market that is facing over-capacity in terms of storage.

Senior fuel oil trader Low said the firm expects the Singapore bunker market, the world's largest by volume, to continue to grow mainly because of intense price competition among players.

"The storage capacity is so huge and all the players, even mid-sized players like us are here, making prices very competitive," Low said.

"Singapore has the lowest price in the region, most times, even lower than Fujairah. The market here will continue to grow because of this price competition."

OPET is also looking to invest in oil terminal projects in the region, mostly in Malaysia and Indonesia, where it is in initial talks but Sarper said it is too early to disclose details.

The company has 1.3 million cubic meters of oil storage capacity in the country, with the latest in its Marmara region. Most of the capacities are for its own imports but some are leased out to third-parties.

(Editing by Ramthan Hussain)