* S. Sudan resumes crude exports after 17-month halt
* China, S. Korea snap up cheaper Dar Blend from S. Sudan
* Dar Blend exports to double to more than 4 mln bbls in
* Nile Blend exports seen at 1.2 mln-1.8 mln bbls a month
By Florence Tan
SINGAPORE, July 2 South Sudan's shipment of its
first crude cargoes in June after 17 months out of the market,
on top of falling Japanese demand for similar medium to heavy
sweet grades, has sent premiums tumbling.
The restart knocked August prices of one heavy sweet, or low
sulphur, crude from Australia to 1-1/2 year lows, and pressured
other premiums for other medium to heavy grades, improving
margins for refiners able to run such oils.
Chinaoil and Unipec, the trading arms of PetroChina
and Sinopec , have snapped up
cheaper barrels after South Sudan and neighbour Sudan resolved a
dispute over pipeline fees that had been running since January
"The market for medium sweet crude will die unless Japan
comes back to buy, which is not the case at the moment," a
trader with a North Asian trading company said.
Sellers such as Woodside Petroleum, BHP Billiton
Ltd, Apache Corp, Inpex Corp, Mitsui &
Co and Chevron Corp had all seen premiums for
their crudes hit records as Japan used more oil for power
generation after shutting most of its nuclear plants following
the earthquake and tsunami of 2011.
This year Japan has been turning to cheaper coal in an
effort to cut its fuel bills.
In the first four months of the year, Japan's top 10
utilities consumed a third less crude versus the same period
last year, data from the Federation of Electric Power Companies
of Japan showed.
OTHER SUPPLIES EMERGING
Australia's Vincent oilfield - another crude that can be
used in power plants - is also due to restart in
August-September, adding 1.5 million more barrels of heavy sweet
supply each month.
"There is more and more crude, but more refineries prefer
heavier and higher sulphur crude," said the North Asia trader.
The increase in supply has pressured spot premiums for
Australian and Indonesian crudes such as Enfield, Stybarrow,
Pyrenees, Vincent, Van Gogh and Duri.
Spot premiums for Pyrenees, for instance, have slipped for
August loading barrels below $6 a barrel to dated Brent, the
lowest in 1-1/2 years.
Buyers of Australian crudes were previously paying premiums
as high as $7 per barrel.
"Without demand from the Chinese, you can't maintain prices
at that level," a trader with a North Asian refiner said.
With South Sudan's Dar Blend, buyers get discounts of about
$10 per barrel to dated Brent, more than enough to compensate
for the lower quality of the Sudanese crude.
Australian grades have a higher content of vacuum gasoil
that can be processed into valuable middle distillates. Dar
Blend is more acidic and cannot be used at many refineries.
Besides the Chinese trading companies, South Korea's top
refiner SK Energy has also bought a July Dar Blend cargo, even
though it does not typically buy the grade, traders said.
South Sudan stopped exporting oil in early 2012 because of a
row with neighbour Sudan over pipeline fees. It resumed its oil
output in April and the first exports were shipped in June.
Dar Blend exports are expected to double to more than 4
million barrels in July from 2.2 million barrels the previous
month, traders said.
Beyond July the outlook remains unclear because Sudan has
threatened to close the pipelines again as it South Sudan of
(Editing by Tom Hogue)