June 14, 2012 / 12:25 PM / 7 years ago

Yemen seeks gasoil, no sign of more Saudi help

DUBAI, June 14 (Reuters) - Yemen is seeking up to 240,000 tonnes of high-sulphur gasoil for delivery in July and August as its main refinery remains shut and there is no sign that Saudi Arabia will extend fuel donations into July, traders said.

Attacks on Yemen’s main pipeline have halted the flow of crude through its main pipeline since last October and forced its 150,000 barrel per day (bpd) Aden refinery to close, leaving the impoverished country even more dependent on imports and donations.

Saudi state oil giant Aramco has thrown one lifeline after another to its troubled southern neighbour, which has slipped into chaos during a year of unrest.

Yemen’s location on the strategically important Bab al-Mandab strait, through which millions of barrels of oil are shipped between Asia, Europe and the Americas, makes instability there a risk to global trade.

Yemen has opened a tender this week for at least two cargoes of 60,000 tonnes of high-sulphur gasoil each, and two optional cargoes, for delivery in the first two weeks of July and August.

Severe fuel shortages leading to the deaths of dozens of people in street battles prompted Aramco to donate 3 million barrels of crude. In 2012 so far, apart from March, the kingdom provided a continuous flow of oil products to Yemen worth hundreds of millions of dollars.

Aramco typically bought cargoes from the spot market and asked that suppliers deliver them into Yemen rather than to Saudi ports.

But for July, four industry sources said, Aramco has not given instructions to buy for Yemen so far.

“Donations have not been extended to July, at least so far,” one trader who regularly supplies into Yemen said.

Another trader said the actual delivery of some cargoes scheduled for June was going to be delayed into July, but that was part of the old donations for June and May.

One industry source also said Yemenis might try to approach Saudi King Abdullah to extend the fuel grants. But the sources do not see the pause in donations as a sign of waning support by Saudi Arabia.

“Stability of Yemen is a political priority for Saudi Arabia,” one of the sources said.

Another tender by Yemen seeking 30,000 tonnes of jet fuel for delivery in July closed earlier this week.

Swiss-based trading houses including Trafigura and Vitol have term deals to supply Yemen with refined oil products, but volumes required for cars and power stations rise especially during the peak summer season.

Saudi Arabia, Western and Gulf states pledged more than $4 billion in aid to Yemen at a Riyadh conference last month. On top of support in oil, the kingdom also provides military aid.

Yemen, a small, non-OPEC oil producer with important liquefied natural gas investments, has been chaotic since popular uprisings last year brought the 33-year rule of former President Ali Abdullah Saleh to an end.

The Yemeni army notched up a major victory this week in its U.S.-backed offensive to drive al Qaeda-linked insurgents from the country’s south by recapturing strategic cities. (editing by Jane Baird)

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