Aramco Seals Term Diesel Supply Contracts

Saudi Aramco has concluded supply deals to purchase up to 7.14 million barrels of diesel for delivery in 2010 from private trading firms and international oil companies, industry sources said.

The world's top oil exporter, which typically steers away from longer-term supply contracts as it strives for fuel self-sufficiency, has already agreed to buy nearly 5 million barrels of diesel with four firms.

Swiss based trading firm Vitol, oil major British Petroleum, Kuwait's Independent Petroleum Group (IPG) and Japan's Itochu Petroleum will each supply about 1.19 million barrels to Aramco, sources said.

Aramco also has the option of purchasing an additional 595,200 barrels from each respective company, under the individual deals. These deals will run from March through December, traders said.

The price on the deals was concluded at a premium of US$2 to Middle East benchmark quotes on a 0.5% sulphur basis, cost and freight (CFR). Last year Aramco concluded its term deals at a premium of around US$2.70.

'It isn't just Aramco, term buyers have limited their volumes this year because they know that the spot market can be very attractive due to oversupply pressuring prices,' a Middle East trader said.

The state oil firm was expected to purchase a combination of different sulphur content cargoes from the firms. - Trade Arabia