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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Brightoil steps up trading outside Singapore

Hong Kong-listed firm in arbitrage play as it steps up its strategy of sourcing fuel oil cargoes directly.

Updated on 22 Aug 2011 08:02 GMT

Fuel oil trader and bunker supplier Brightoil Petroleum has traded its first fuel oil arbitrage cargo from the Caribbean to Asia, Reuters reports, as the company begins to step up its strategy of sourcing its own cargoes directly, rather than purchasing from other cargo traders in Singapore.

The Hong Kong-listed firm is reported to have chartered one aframax tanker to load 80,000 tonnes of fuel oil product from the Caribbean at the end of August for delivery to Singapore in October.

The trading play comes approximately six months after Brightoil launched its trading office in the United States. The company also has storage facilities in Freeport, Bahamas.

Industry sources said the cargo is expected to be a combination of low-grade slurry, which has high density, high metals and high sulphur content, from the United States and 'better-grade' Mexican fuel oil of lower sulphur content.

The aframax Ambelos is due to load the cargo from Brightoil's storage facilities in Freeport on around August 25th and delivery into Singapore is expected in early October.

The decision to hire the relatively small vessel instead of a VLCC (Very Large Crude Carrier) is somewhat of a surprise, as most players choose to use VLCCs for such operations to maximize the economies of scale.

Brightoil's fuel oil fixture comes amid a period of strong East Asian demand for heavy, high-density cargoes from the Caribbean region, particularly from Venezuela, the region's largest supplier.

The East Asian fuel oil market is expected to be tight for the second consecutive month in September and the upsurge in demand as a result has led to larger-than-usual volumes, mostly for arrival in October, from the Caribbean.

National oil company, PDVSA, has seen such a rise in demand that it is selling raw, unblended fuel oil via spot tenders in addition to its regular supply of 2-3 VLCC cargoes to term buyer PetroChina.

Other non-regular players to have been involved in arbitraging fuel oil cargoes into East Asia include Glencore, Trafigura, BP and Vitol.

In addition to its operations in the United States, Brightoil is also reportedly looking to establish an office in London - a primary source of Western arbitrage cargoes - as it steps up its fuel oil trading operations outside Singapore.

Up until now a large portion of Brightoil's supply has come from the trading system in Singapore, where it has purchased from other cargo players, rather than sourcing its own cargoes directly. The company has around 350,000-400,000 cubic metres (cbm) of storage capacity in the city-state and is planning to expand its storage capacity in China to almost 15 million cbm over the next few years.

The main outlet for Brightoil's fuel oil cargoes is the marine fuels market. The company carries out marine bunkering operations in a number of major ports, including Shenzhen, Shanghai, Ningbo, Zhoushan, Singapore, Hong Kong, ARA region and Malaysia.

For the six month period ended 23rd December 2010, sales volumes for its international supply and bunkering segment surged 100 percent to 3.4 million tonnes from 1.7 million tonnes the previous year.

Related Links:

Brightoil plans downstream and upstream growth
Brightoil in fuel oil buying spree
Brightoil and Unipec eye Fujairah storage - source
Brightoil $600 million loan approved
Hong Kong

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