Southernpec eyes crude trade with third floating tank
10.18.2010 - NEWS
October 18, 2010 [] - China's Southern Petrochemical Co (Southernpec) has bought its third floating storage vessel which it may use for trading crude oil for the first time and expand its fuel oil volumes, industry sources said on Monday.

The firm, an affiliate of Asia’s top refiner Sinopec Corp, has to decide whether to use the converted Very Large Crude Carrier (VLCC), expected to be operational by end-November, for its own trading purposes or to lease it out to a third party, company sources said.

“We have acquired a third VLCC and it will be used for both fuel oil and crude trading, but we haven’t decided to lease it out, use it ourselves or do a joint-venture,” a Southernpec official told Reuters.

Southernpec, which bought the 300,000-tonne tanker from Eastern Mediterranean Maritime for $14 million and renamed it the Southernpec 8, owns two other floating storages off Tanjong Pelepas in Malaysia’s southern coast.

One, the Southernpec 3, is used for its fuel oil trading and supply of bunker fuel, while the Southernpec 5, has been leased to its minority shareholder Sinopec, which also trades its own fuel oil book.

“The fuel oil market is quite saturated and margins have not been good for most players. That’s why Southernpec is thinking about trading crude on the new VLCC, whether on their own or with someone else,” a Singapore-based Asian trader said.

“They could co-occupy the VLCC with another party, lease it out entirely or used it for their own trading. But their current fuel oil volumes are not fantastic and they are not fully utilising their existing VLCC.”


Southernpec currently trades 80,000-100,000 tonnes of fuel oil per month, mostly in Singapore’s marine fuels market, the world’s largest with around 3.4 million tonnes per month.

If Southernpec also starts trading crude, it will join Unipec, the trading arm of Sinopec, and Chinaoil, the trading unit of PetroChina, which has been trading actively in recent years in the Singapore hub via the Platts trading window to underscore China’s role as a major pricing force.

The VLCC will be the third floating storage facility for crude in Malaysian waters, after European trader Arcadia Energy and Singapore-based Strong Petroleum.

The two firms, which has leased the VLCCs Edinburgh and Titan Neptune, respectively, and also operating off Tanjong Pelepas, have been trading crude off floating storages for one to two years.

Southernpec began operations in Singapore about a year ago with one VLCC and expanded to two within the same year, while also moving to selling delivered bunkers about two months ago.

It joins the growing list of Chinese firms, notably PetroChina, now Asia’s largest fuel oil supplier by volume, and Brightoil, which plans to become a global trading force, after hiring at least 20 ex-BP trading personnel.

The Guanngzhou-based company, founded in 2002 with a registered capital of $45 million and trades oil products, chemicals and coal in China, saw total sales revenue of about $3 billion (20 billion yuan) last year for 6 million tonnes of commodities.

Asia Spot LNG Holds Steady as Demand Weak, Inventories High
11.28.2023 - NEWS
November 28, 2023 [Hellenic Shipping News]- Asian spot liquefied natural gas (LNG) prices were li... Read More
Kutch Ports Fuel Green Hydrogen Mission
11.28.2023 - NEWS
November 28, 2023 [Businessline]- Kutch in Gujarat is a crown jewel in the port sector of not jus... Read More
Neste to Introduce Solar Power to its Porvoo Refinery
11.28.2023 - NEWS
November 28, 2023 [Neste]- Neste has signed a purchase agreement for solar power supply to its Po... Read More
Octopus Boosts Renewable Capacity Ahead of Shell Energy Deal
11.28.2023 - NEWS
November 28, 2023 [City AM]- For an undisclosed fee, Octopus Energy has bought into Ørsted’s W... Read More