Saudis Shuttle Refined Oil, Hope to Sell Ship-to-Ship

Saudi Arabia has started to shuttle some refined oil products out of the Persian Gulf in a bid to maintain export levels and gain some extra storage capacity, oil traders in the region said today.

SAMAREC, the kingdom’s oil refining and sales arm, issued a tender today to sell naphtha and fuel oil off Fujairah, in the Gulf of Oman, from floating storage by ship-to-ship transfer.

“High insurance rates kept some tankers out of the gulf, so to keep refineries going they must have decided to put some products on water (for storage),” a Gulf-based oil trader said.

Another said a Japanese seamen’s union decision to stay out of Saudi Gulf ports, although it has been reversed since last week, decreased the kingdom’s naphtha exports to some extent in January, and created storage problems at refineries.

Otherwise, shipping and oil industry sources said, the Saudi decision to shuttle products out of the gulf does not seem to be linked to any threat to navigation in the waterway and probably was prompted by commercial reasons.

The world’s biggest crude oil exporter started to shuttle crude oil out of the Gulf last week to help keep its market share and despite a diminishing threat to shipping in the waterway, the oil industry sources said.

Saudi Aramco, the state-owned oil company, has chartered three ultra-large crude carriers--including the world’s biggest tanker, the 516,895-ton Kapitan Mikaelis--to use as floating storage

Saudi Aramco has so far offered crude only to developing countries, including India, Pakistan and the Philippines.

Iran and Qatar are also shuttling crude oil from their main terminals to safer waters in the southern Gulf.