SINGAPORE, Oct 19: Pakistan State Oil (PSO) has issued a tender to buy 275,000 tons of high-sulphur fuel oil for November and December delivery, industry sources said on Wednesday.
The company is seeking three confirmed cargoes of 125-180-centistoke (cst), of 55,000 tons each, for deliveries during Nov 1-3, Nov 8-10 and Nov 16-18 to the Port Qasim in Karachi.
It is also requesting for two optional cargoes of the same size for November and December delivery, on a cost-and-freight (C&F) basis.
The tender closes on Oct 25 and will remain valid till Oct 27.
Traders expect the cargoes to be awarded at higher premium levels than those fetched in its previous tender, due to tight fuel oil supplies in Asia.
“The market will still be tight in November when most of the deliveries are due. The tenders are normally filled by Middle East traders because of cheaper freight and the market there may not be as tight as in East Asia,” a Singapore-based trader said.
“But if demand from here is good and prices are high, it would make more sense for the spot Middle East cargoes to be arbitraged here. So Pakistan will have to pay up if they want the cargoes.”
PSO last paid premiums of between $16.25 and $29.75 a ton to the Middle East spot 180-cst quotes for four cargoes totalling 220,000 tons for September and October deliveries.
The country is expected to buy 25 per cent more fuel oil for this financial year, which ends next July, to one million tons due to increased demand for power.
Demand for power in 2005 is expected to be at 15,000-16,000 megawatts, up 858 mw from 2004. The country’s total power generation capacity stands at 20,000 mw, of which 39 per cent is generated by fuel oil.—Reuters
