July 23, 2018 / 7:40 AM / 3 months ago

Taiwan's Formosa buys first U.S. crude to replace Mideast oil: official

SINGAPORE (Reuters) - Taiwanese oil refiner Formosa Petrochemical Corp has bought a U.S. crude oil cargo for the first time to replace Middle East crude, the company spokesman said on Monday.

The company bought 1 million barrels of U.S. Mars crude to be delivered between the second-half of September and the second-half of October as its price was competitive with those of Middle East oil, Formosa’s spokesman KY Lin told Reuters.

“The (refining) margins derived from processing U.S. Mars crude are very close to that of Basra and its sulfur content is also lower than Basra,” Formosa’s spokesman KY Lin told Reuters, referring to Iraqi Basra Light crude, which the refinery buys in the spot market almost every month.

“We will try out the U.S. crude at our refinery, whether it’s suitable, and decide later if we’ll include the grade in future spot purchases,” he said.

Formosa joins several refiners across Asia in trying out new U.S. grades and increasing imports as the United States ramped up output to all-time highs this year while China, the second-largest U.S. oil importer after Canada, cuts back imports amid a trade war.

U.S. oil has become more competitive in Asia after the Organization of the Petroleum Exporting Countries (OPEC) and Russia reduced production in the first half of the year and pushed up prices for the Middle East and Russian Far East grades, traders said.

Fellow Taiwanese refiner CPC Corp buys at least 4 million barrels of U.S. light crude WTI Midland each month.

Formosa bought the U.S. Mars crude cargo at 50 cents to $1 a barrel above Dubai quotes for delivery to Taiwan, a source familiar with the matter said, just slightly more expensive than September-loading Oman crude sold on a free-on-board basis.

Reporting by Florence Tan; Editing by Christian Schmollinger and Sherry Jacob-Phillips

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