ADNOC offers rare ultra-low sulphur diesel ahead of cleaner fuel move

Thu Aug 30, 2012 9:51pm EDT

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* ADNOC offers second and third 10 ppm sulphur diesel cargoes

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* UAE expected to switch to cleaner fuel standards from next year

By Jessica Jaganathan

SINGAPORE, Aug 31 (Reuters) - State-owned Abu Dhabi National Oil Co offered two rare ultra-low sulphur diesel cargoes ahead of the country's anticipated move towards cleaner fuel early next year, industry sources said on Friday.

The company has offered its second and third cargoes of diesel with 10-parts-per-million sulphur for sale in the spot market, in a further sign that it will shift production permanently to cleaner fuel.

It sold its first-ever 10 ppm sulphur diesel cargo in late June.

Abu Dhabi, the main crude producer of OPEC member the United Arab Emirates, plans to switch the country's diesel fuel supply to solely ultra-low sulphur diesel by 2013, according to a strategic plan for 2009-2013, in a bid to align itself with the global shift towards cleaner fuels.

ADNOC's diesel previously had a minimum sulphur content of 500 ppm but the company wants to slash that to 10 ppm, in line with strict clean air standards in Europe, and has been studying ways to shift production to cleaner fuel.

In its latest tender, ADNOC is offering two cargoes of 40,000 tonnes each of 10 ppm sulphur diesel for loading over Oct. 3-5 and Oct. 15-17. The tender closes on Sept. 5 and is valid until Sept. 10.

While ADNOC's previous cargo sold was not able to meet European summer specifications, the current two cargoes for sale did, an industry source said,

This means ADNOC's cargoes will be more sought after for traders looking to move the cargoes west at a cheaper freight rate than if they were to move them from Asia.

The two cargoes are also indicative that the company will likely offer a term contract for ultra-low sulphur diesel for next year.

If this happens, ADNOC will be the only refinery in the Middle East supplying 10 ppm sulphur diesel on a regular basis. Oman's refinery currently exports 15 ppm sulphur diesel occasionally to Europe.

Most Middle East refineries are not able to produce diesel meeting Europe's stringent specifications, especially for winter.

Bahrain Petroleum Corp (BAPCO) sold a low sulphur diesel cargo many years ago, and has the capability to produce low sulphur diesel but currently does not do so because of better economics for domestic 500 ppm sulphur diesel, traders said.

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