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Vietnam's Petrolimex (Vietnam National Petroleum Corporation) is reported to have sealed a 12-month fuel oil deal with Russian oil major Lukoil, which is scheduled to run from January until December 2010.

Under the new agreement, Petrolimex is set to receive monthly 80,000 to 90,000-tonne cargoes of Russian M100 fuel oil, which may enable the company to skip its 3-monthly fuel oil tenders this year. The first delivery is expected at the end of this month.

According to reports, the product will be initially blended on board Lukoil's floating storage vessel, the Titan Chios, currently anchored off Malaysia's Tanjong Pelepas port.

The monthly fuel oil volumes are set to be used to mainly meet Petrolimex's utility requirements with some product expected to be set aside to refuel their own vessels and other Vietnamese ships calling at Singapore.

With a monthly fuel oil purchase deal now in place it is considered unlikely that Petrolimex will need to buy additional product via quarterly tenders. The company may instead decide to buy on a spot basis if more fuel oil is required.

When purchasing via tender, Petrolimex has typically bought 300,000 tonnes on a 3-monthly basis from trading companies such as Vitol, Kuo Oil and BP.

The M100 fuel oil cargoes, which have a maximum density of 0.991, are sourced from Lukoil's refining network, either from the Baltic or Black Sea regions.

Petrolimex typically buys low 0.97 density and high 0.99 density cargoes for power generation and 380-centistoke (cst) bunker grade.