TNB seeks 100,000 tonnes of November fuel oil
Published: Oct 7, 2011 12:16 PM
| Updated: Oct 7, 2011 12:17 PM
Malaysia’s national power utility, Tenaga Nasional , has issued a tender seeking 100,000 tonnes of November-delivery fuel oil after buying similar volumes for this month, traders said today.
Malaysia’s national power utility, Tenaga Nasional , has issued a tender seeking 100,000 tonnes of November-delivery fuel oil after buying similar volumes for this month, traders said today.
The utility started buying large volumes of fuel oil regularly from the second quarter of this year and is expected to continue doing so until early next year, because the country’s power sector has been receiving only two-thirds of its natural gas allocation from Petronas.
“They will probably have to pay more for their cargoes this time round, given the severely imbalanced state of the market currently,” a Singapore-based Western trader said.
The utility is seeking four 20,000 tonne parcels and two 12,500 tonne lots of low 0.98 density, all for delivery in Nov 1-28 to Kapar in Selangor and Pasir Gudang in Johor, via the tender, which closes on Monday.
It last purchased a total of 105,000 tonnes, mostly from oil major Shell , at premiums of US$25-US$30 a tonne to Singapore spot quotes on a free-on-board (FOB) basis.
So far, Tenaga has bought about 450,000 tonnes for April delivery onwards, mostly from Shell and European trader Mercuria.
Tenaga’s demand, regarded as unexpected and irregular before April, is expected to squeeze the market for low-density cargoes, which is already tight due to a seven-month high in Western arrivals at 3.9-4.0 million tonnes for this month, leading to severe quality imbalances.
Reflecting this, the market's prompt structure has been severely backwardated for about the past three weeks since the start of the October pricing month, with October/November at seven-month highs of above US$9 a tonne for the past week.
Tenaga had earlier said it has spent RM400 million (US$134.4 million) a month to buy power-generation fuel, draining its cash flow and eating into its reserves.
Petronas usually allocates 1,350 million standard cubic feet per day (mmscfd) of gas to the power sector. Supply has fallen below 1,000 mmscfd since the start of 2011 and now hovers between 900-950 mmscfd.
In its third-quarter financial results, Tenaga posted a net loss after it spent an additional 1.3 billion ringgit on fuel.
- Reuters
The utility started buying large volumes of fuel oil regularly from the second quarter of this year and is expected to continue doing so until early next year, because the country’s power sector has been receiving only two-thirds of its natural gas allocation from Petronas.
“They will probably have to pay more for their cargoes this time round, given the severely imbalanced state of the market currently,” a Singapore-based Western trader said.
The utility is seeking four 20,000 tonne parcels and two 12,500 tonne lots of low 0.98 density, all for delivery in Nov 1-28 to Kapar in Selangor and Pasir Gudang in Johor, via the tender, which closes on Monday.
It last purchased a total of 105,000 tonnes, mostly from oil major Shell , at premiums of US$25-US$30 a tonne to Singapore spot quotes on a free-on-board (FOB) basis.
So far, Tenaga has bought about 450,000 tonnes for April delivery onwards, mostly from Shell and European trader Mercuria.
Tenaga’s demand, regarded as unexpected and irregular before April, is expected to squeeze the market for low-density cargoes, which is already tight due to a seven-month high in Western arrivals at 3.9-4.0 million tonnes for this month, leading to severe quality imbalances.
Reflecting this, the market's prompt structure has been severely backwardated for about the past three weeks since the start of the October pricing month, with October/November at seven-month highs of above US$9 a tonne for the past week.
Tenaga had earlier said it has spent RM400 million (US$134.4 million) a month to buy power-generation fuel, draining its cash flow and eating into its reserves.
Petronas usually allocates 1,350 million standard cubic feet per day (mmscfd) of gas to the power sector. Supply has fallen below 1,000 mmscfd since the start of 2011 and now hovers between 900-950 mmscfd.
In its third-quarter financial results, Tenaga posted a net loss after it spent an additional 1.3 billion ringgit on fuel.
- Reuters
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