Engen buys Saudi oil to replace Iran's shortfall
Engen has turned to top oil exporter Saudi Aramco for additional crude after South Africa’s biggest buyer of Iranian crude halted imports from the Islamic Republic, trade sources said on Wednesday.
Engen, majority owned by Malaysian national oil company Petronas, will replace about half of the Iranian volumes with Saudi supplies and the remaining will be filled up from the spot market, mainly from West Africa, the sources said.
The refiner suspended an annual contract for 50 000 barrels per day of Iranian crude in March, joining a growing list of buyers bowing to Western pressure to cut business dealings with Tehran to isolate the country.
“The [Saudi] volume is on a spot basis and it does not fully cover their Iranian term volume,” a source familiar with the Saudi deal said.
Refiners would be able to replace Iranian crude with ease at this point as the market is well supplied with most other Opec members ramping up output while weak margins and a peak refinery maintenance season curb demand.
Saudi Arabia has ramped up production to prevent oil prices from skyrocketing and pledged to fill the vacuum left by Iran as tightening sanctions from the United States and European Union deter buyers from lifting Iranian oil.
Engen is seeking mainly West African grades from the spot market to cover other import needs, they said.
The company had booked the tanker Bouboulina to load 950 000 barrels of Angolan Girassol crude on April 17, a shipping fixture showed.
Engen could not be immediately reached for comment.
Engen has also stopped buying Iranian crude for its Malacca refinery.
Petronas has turned to the Middle East spot crude market to replace the Iranian supply of about 10 000 bpd, sources said.
“Malacca is quite a dynamic refinery as it can take a lot of grades,” a source said, adding that the company can choose from a variety of Middle Eastern grades.
Some of the other grades that Malacca can use include Dubai, Eocene and Egyptian Belayim, a second source said.
Petronas has booked the tanker Stavanger Bay to load on May 8 about 500 000 barrels of Belayim crude from Wadi Feiran, a shipping fixture showed. The tanker is scheduled to head to Malacca.—Reuters.