Industry and Energy

Industry and Energy

Azerbaijanâ€™s SOCAR opens an office in Singapore

26 May 2009 15:21 (UTC +04:00)

Baku. Rashad Suleymanov â€“ APA-Economics. Azeri state-owned oil trader Socar Trading has opened an office in Singapore, one of the latest newcomers in the city-state, as it seeks to secure term contracts for its crude, a top official said on Tuesday.

Socar Trading, a unit of state oil giant Socar, opened its first office in Geneva last year targeted at the European market, and is now looking for Asian term customers, Reuters quoted chief executive Valery Golovushkin as saying.

"The Singapore office will be to develop term contracts and relationships with companies in Asia. Logistical possibilities like storage in South Korea are also important," Golovushkin told reporters on the sidelines of a traders’ summit.

Socar is looking to export more crude and oil products to Asia, but through long term contracts rather than spot sales.

The company is targeting steady sales of 5-6 million barrels a month of the high-quality, low-sulphur Azeri Light crude, compared to the spot cargoes it ship to Asia whenever the arbitrage is open.

Socar, and other equity partners in Azerbaijan regularly sell the grade to Indian refiners, as well as Indonesia’s state oil Pertamina and Thailand’s PTT.

But it has so far been unable to secure long-term term contracts for the grade in Asia, Golovushkin said, unlike in Europe and the United States, where Azeri Light is more established.
Rival Sonatrach from Algeria, which produces and markets a similar crude grade, Saharan Blend, rents an estimated 6 million barrels of storage capacity in South Korea, giving it an edge in Asian markets, although it is not believed to have secured term contracts with refiners in the region.

Socar Trading joins Turkey’s trading company Opet Trade and Nigeria’s Sahara Energy International, which have also opened offices in Singapore over the past few months.
Golovushkin declined to say how many people Socar had hired so far for the Singapore office since it opened last month.

"It is very small, we have only a few people. We are still in the process of setting up the team," Golovushkin said.

The Singapore office will also aim at developing long-term relationships with Asian companies that could lead to upstream joint-ventures, Golovushkin said.

An Azeri government source told Reuters in February Azerbaijan aims to produce 45 million tonnes (900,000 barrels per day) this year, the first year in a decade that production would remain flat, due to production problems and low oil prices.

Most Azeri oil production is controlled by a BP-led consortium, which since September has experienced technical problems at the giant Azeri-Chirag-Gyuneshli (ACG) deposit, the main source of oil for the BP-operated Baku-Ceyhan pipeline running from the Caspian Sea to the Turkish Mediterranean coast.

Oil production was suspended at two platforms -- Western and Central Azeri -- due to a gas leak and has only partially resumed.