State-owned PetroChina and independent refiner Hengli Petrochemical won the first auction of China’s state crude oil reserves, industry sources said. PetroChina took 951,137 barrels of Qatar Marine and 1.1 million barrels of Forties for $65 per barrel, cheaper than CFR North Asia assessments of $74.78 per barrel for Qatar Marine and $78.18 per barrel for Forties on September 23. Meanwhile, Hengli won 1.79 million barrels of Oman at $65 per barrel and 592,031 barrels of Upper Zakum at $70.50 per barrel, compared to the grades’ CFR North Asia assessments of $75.18 and $70.50 per barrel, respectively.
The awards to PetroChina and Hengli are in line with the market’s expectations. Petrochina Dalian has pipeline access to Qatar Marine and Forties stored in Dalian Xingang storage sites. Meanwhile, Hengli’s site in Changxing Island is connected through a pipeline with storage tanks on the same island. Market sources said PetroChina and Hengli competed intensely to secure Upper Zakum crude in the auction.
On the other hand, the 2.95 million barrels of Murban crude, which are stored in the Changxing Island site, did not receive any bids. Industry sources said the Murban cargo required more cash to win due to its big volume. Murban bidders were required to pay CNY118 million ($18.25 million) of a refundable deposit, and the winner had to pay the remaining within 12 days after the auction.
