Kuwait's KPC has signed a term agreement with fellow state-owned firm Qatar Energy (QE) to supply very-low sulphur fuel oil (VLSFO) for loading over July 2024 through to June 2025.
The VLSFO supplied amounts to 1.2mn t/yr (21,000 b/d). KPC finalised the term contract at around a $8-9/t premium against the average of Singapore 0.5pc marine fuel spot assessments, according to a source close to the company.
QE has expanded its own bunkering infrastructure at the port of Ras Laffan and started relying on VLSFO supplied from Kuwait's 615,000 b/d al-Zour refinery since early last year. The VLSFO supplied is to meet the country's bunkering demand.
QE had a previous mini term VLSFO agreement with KPC last year. KPC supplied around 1-2 Medium Range size vessels of VLSFO each month from January 2023 to March this year, according to global trade analytics platform Kpler.
The announcement of the term deal left the market unfazed, said a Dubai based fuel oil trader, as KPC has regularly offered term tenders over the year. Supplies to QE has been continuing since last year, with the deal merely being a renewal of their previous agreement, the trader added.
This is KPC's third official term contract concluded since the start-up of al-Zour in late 2022. The first term contract was awarded for second-half 2023 loading to Shell, with the second to ExxonMobil for first-half 2024 loading. The terms of the two contracts stated a minimum of 80,000 t/month and a maximum of 720,000 t/month of VLSFO, with KPC having discretion over the total volume.
Al-Zour can produce around 11mn-12mn t/yr of VLSFO at full capacity, with around half of it allocated for exports.
