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Tue 5 Aug 2008, 15:31 GMT

NIOC says fuel oil exports will not be halted


Managing Director quashes claims that Iran will stop exporting fuel oil.

The Managing Director of The National Iranian Oil Company(NIOC) has rejected recent reports claiming that Iran would stop exporting fuel oil after its peak summer demand season.

Seifollah Jashnsaz [pictured] told Islamic Republic of Iran Broadcasting (IRIB) that fuel oil exports would not be halted and that Iran would continue to carry out shipments to its trading partners as normal.

News service Reuters had reported that Iran would halt exports of heavy fuel from August ahead of the winter season, due to a heavy fourth-quarter maintenance season.

It had also been suggested that Iran has already started to build stocks of fuel oil more than four months ahead of winter, because it has more than 400,000 barrels per day (bpd) of refining capacity offline due to scheduled maintenance.

Over the previous two winters, Iran has reduced exports of fuel oil due to an increase in domestic consumption. This resulted in exports to the Middle East's major bunkering port, Fujairah, being slashed by up to 60 percent.

Another reduction in fuel oil shipments this year are also likely to have had similar consequences for the Middle East bunkering market.

Fujairah is one of the leading bunker ports in the world with estimated volumes of between 13 and 15 million tonnes per year.

The announcement by IRIB will be welcome news for the Middle East and the Asian market in general after Saudi Arabian refiner Saudi Aramco recently decided not to sell any spot fuel oil after its peak summer demand season, due to rising requirements from domestic utilities and new secondary refining units. Recent tight supplies in Asia has helped raise crack levels to approximately $13-$14 a barrel below Dubai crude.

Aramco typically exports one or two 80,000 tonne fuel oil cargoes per month. It usuallly offers a 380-centistoke cargo from its refinery in Jubail or a 180-centistoke parcel from its Ras Tanura oil processing facility.

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