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Aramco Buys Nearly 200,000 T Spot From Mideast

Source: Reuters 6/23/2014, Location: Middle East

Saudi Aramco's trading arm, Aramco Trading, bought a total of 125,000 tonnes of naphtha from Bahrain and Qatar last week, shortly after it had purchased Kuwait's spot naphtha cargoes for the first time, traders said.

Aramco Trading picked up 75,000 tonnes of naphtha from Bahrain Petroleum Co (Bapco) for loading around middle of August, from Sitra at premiums close to $30 a tonne level to Middle East quotes on a free-on-board (FOB) basis, traders said.

Aramco Trading had also scooped up a 50,000-tonne plant condensate cargo, which is a naphtha grade, from Qatar's Tasweeq for late-to-end July loading from Ras Laffan at premiums in the high $20s a tonne level to Middle East quotes on an FOB basis.

These brought Aramco Trading's total spot purchases for late-July to mid-August loading from the Middle East, including those from Kuwait, to nearly 200,000 tonnes.

"Aramco is a game changer. Although there's no change to what its refineries can supply, Aramco is now buying spot cargoes and competing for barrels with trading houses," said a Singapore-based trader. "It is hard to forecast how many cargoes Aramco will sell in a single month now, unlike before."

Saudi Aramco, the world's top oil exporter, had previously tied up almost all of its naphtha supplies through contracts, making it easier for traders to estimate the number of cargoes it will ship out on a monthly basis.

But the Middle Eastern oil firm, which has refineries throughout Saudi Arabia, including Yanbu, Jeddah, Rabigh and Jubail, decided not to renew these free-on-board (FOB) term deals last year.

It had instead been selling its barrels mostly in the spot market and through cost-and-freight (C&F) basis deals where buyers do not need to charter vessels on their own.

Only in recent weeks was Aramco Trading seen buying spot barrels through tenders from other Middle Eastern refiners.

Traders expect the company to continue buying spot cargoes from third parties as the firm was set up for the purpose of trading oil products.

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