Record Asian sales

December 15, 1998, 08:40 CET

A new monthly record of six million barrels will be set for Statoil's crude oil sales to the Asia-Pacific region during December.

Hailing from Norway's Oseberg field in the North Sea, these deliveries will be split into three consignments carried by very large crude carriers (VLCCs).

The sweet (low-sulphur) crude from Oseberg is well suited for refineries in China, Taiwan, South Korea and other Asia-Pacific countries. But Japan's upgraded refineries prefer to utilise lower-quality oils.

"We've made a conscious commitment over three-four years to forging good contacts with the big players in this market through our trading offices in London and Singapore," reports Gunnar Sletvold. He is vice president for crude oil in Oil Trading & Supply.

"Time and effort have been devoted by our personnel to building up a name among Asia-Pacific customers, and we're now seeing the results."

Interaction between the group's trading offices in different parts of the world is very important for its success in this market, says Marcel Kramer, president of Statoil Asia Pacific.

"Crude oil sales in Asia-Pacific are good for our general trading with North Sea crudes. And customers in this part of the world are often national oil companies or members of major conglomerates with whom we cooperate in other areas. Oil sales help to strengthen our image with them."

While North Sea oils are priced in relation to the Brent Blend reference crude, prices for Middle East production are related to the Dubai equivalent.

Brent Blend has previously fetched USD 1-2 more per barrel than Dubai crude, which is also of poorer quality. For much of 1998, however, the price paid for North Sea crudes in Asia-Pacific has been favourable by comparison with Middle Eastern supplies.

"That makes Oseberg oil attractive to refiners in this market, despite the long distance it has to be shipped, since it gives an improved yield of products and thereby better economics," says Mr Sletvold.

He emphasises that Statoil only sells to Asia-Pacific customers if they are prepared to pay more for crude than the group's immediate markets in Europe.

At the same time, the gap between concluding a sale and delivery will be longer since it takes about 45 days to ship crude to south-east Asia.

Statoil has no problems with selling North Sea crudes even though prices are low. Mr Sletvold notes that the group cannot do anything about the Brent Blend reference price prevailing at a given time.

But it seeks to take maximum advantage of the differences between the price of Brent Blend and other North Sea crudes - such as Oseberg oil. A few US cents per barrel make a big difference over a VLCC cargo.

"We're always trying to optimise the value added of our oil trading," says Mr Sletvold.