Standards Concern Divert Saudi ULSD Euro-Bound Cargoes from New Refinery
Teething problems at Saudi Arabia's newly commissioned SATORP refinery has seen at least one Europe-bound cargo of ultra-low-sulfur diesel and possibly a second diverted to storage in the Caribbean, amid speculation the distillate failed to meet European standards.
The tanker SKS Dokka, carrying 80,000 tons of diesel, is in the Mediterranean Sea and signaling its arrival at St. Croix in the U.S. Virgin Islands in 13 days after loading at SATORP, according to the OPIS Tanker Tracker, which monitors diesel and jet fuel shipments into Europe. There is an oil storage terminal at St. Croix.
The shipment, controlled by refinery joint venture partner Total, follows the tanker Ohio, whose cargo of ULSD, also loaded from SATORP, arrived at St. Eustatius eight days ago, satellite tracking data show.
The Ohio "ended up in the Caribbean amid speculation that the diesel on board was not in full compliance with European winter ULSD specifications," London- based energy consultants Energy Aspects said in an April report on the distillates sector.
"Traders expect the SKS Dokka to discharge ULSD in Europe rather than sailing on to the Caribbean, though uncertainty still surrounds the status of the cargo," the report said. "With doubt continuing over the ability of the refinery to make European-specification ULSD, traders may seize on the ship exiting the Mediterranean as a bullish signal."
The SATORP refinery, which helped propel a 71% month- on-month increase in jet fuel exports from Saudi Arabia in January, began shipping distillates in 2013's last quarter, and is designed to refine 400,000 b/d of crude, according to Total, which holds at 37.5% stake with the balance held by Saudi Aramco.
The joint venture is said to have 216,000 b/d of capacity for ultra-low-sulfur diesel and jet fuel, and around 55,000 b/d for gasoline.
The refinery is closely watched as it ramps up, as sales of ULSD into Europe will directly compete with the U.S. and India, the biggest suppliers of diesel to the continent.
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