CEFC China Energy plans to increase the volume of Russian ESPO crude it receives under a long-term supply contract with Russian producer Rosneft since ESPO is sought by more Chinese refiners, four trade sources said.
Starting in July, CEFC could take eight cargoes of about 740,000 barrels, or 5.92 million barrels of ESPO crude, from Rosneft, the four sources said. The cargoes are part of a five-year supply contract with the Russian producer for 12 million tonnes of oil per year it signed late in 2017 that jump started CEFC’s oil trading business.
Previously, Rosneft supplied CEFC with six ESPO cargoes, two cargoes of Sokol crude and two Urals shipments. CEFC will swap the Sokol cargoes with the ESPO, the sources said.
Rosneft said in an email on Friday that it will supply its term contracts based on the agreed timing and volumes without saying that it is increasing ESPO shipments to CEFC.
The swap arrangement is a sign that CEFC’s landmark crude oil deal with top Russian producer Rosneft remains intact even as the Chinese firm’s planned $9 billion investment in Rosneft has stalled.
News that CEFC’s founder and chairman Ye Jianming was investigated by Chinese authorities for suspected economic crimes spooked CEFC’s trading partners in March, but market participants are convinced that China’s government may step in to take over the private company.
“Now the market believes that chances are high that the Chinese government will step in and take care of the problems. It has gone past the earlier panic in March,” said a Beijing-based trading executive who deals with CEFC’s Russian barrels.
The increase in ESPO cargoes gives CEFC control over about 30 percent of the total seaborne ESPO sold in a month, up from 19 percent, making it a key Russian crude supplier to China, the world’s largest oil importer.
Russia was China’s top oil supplier in March, retaining the lead spot for a 13th consecutive month.
CEFC’s number of counterparties has also grown to between six and seven buyers for its cargoes for loading in May to June while the firm last month won for the first time a tender to supply ESPO to Chinese independent refiner Hontop Energy via a third party, one of the sources said.
CEFC has six staff in Singapore to handle crude sales and operations while the team’s managing director Ocean Qiu sits in Shanghai.
Source: ReutersPrevious Next
There Is a Steady Growth in the Number of Indian Seafarers Employed: Dr. Malini V. Shankar, (IAS), Director General of Shipping
India Shipping and Offshore Summit