Taiwan's Formosa Petrochemical offers 2018 jet fuel, diesel term

SINGAPORE (Reuters) — Taiwan’s Formosa Petrochemical Corp has offered a total of 3.3 MMbbl of jet fuel and diesel for 2018 term contracts, tender documents showed on Monday.

Photo courtesy of Formosa Petrochemical Corp.
Photo courtesy of Formosa Petrochemical Corp.

It is the first North Asian refiner to kick off term negotiations, which could set the precedent for other term contracts in the region, traders said.

The company has offered four cargoes of jet fuel of 300,000 bbl each for loading over Jan. 1, 2018 to Dec. 31, 2018, the documents showed.

It has also offered three cargoes of 300,000 bbl each of 10 parts per million (ppm) sulfur diesel for loading in the second, third and fourth quarters of next year.

Formosa offered four cargoes of 300,000 bbl each of 500 ppm sulfur gasoil for next year.

The tenders close on Nov. 9, with bids to remain valid until Nov. 24.

Formosa has also changed the pricing basis for the diesel cargoes, which will be priced off Platts’ 10 ppm sulfur diesel prices instead of the current 500 ppm sulfur prices, according to the documents.

The jet fuel volumes being offered are similar to those in 2017, but the diesel volumes for both 10 ppm and 500 ppm have been reduced.

Formosa finalized its 10 ppm sulfur diesel term contract for January-December 2017 with Winson Oil at a premium of 55 cents a barrel to Singapore quotes, about 20% lower than the 2016 term premium of 70 cents.

It also finalized its jet fuel and 500 ppm sulfur gasoil term contracts, also with Winson Oil, at parity to Singapore quotes.

Reporting by Jessica Jaganathan; Editing by Richard Pullin

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