PetroEcuador awards fuel oil, mulls diesel bids

PetroEcuador awarded fuel oil supply to state-owned PetroChina in a tender that offered new, more flexible payment terms for the first time.

The Quito-based company also opened a purchase tender for diesel.

PetroChina presented the winning bid of a $2.98/bl discount to the US Gulf coast high-sulfur fuel oil price for 2.85mn bl of fuel oil No 6, to be loaded in 15 cargoes of 190,000 bl each until January 2022. The first delivery windows are 1-4 November and 2-5 November 2021.

PetroChina beat competing bids from BB Energy, Glencore and Trafigura.

Trafigura was the only participant to present an alternative bid under PetroEcuador's new advance payment option, in which each cargo is paid four business days ahead of the first loading window, according to the terms seen by Argus.

In an 18 October announcement, PetroEcuador said it is offering this new option as a way for potential buyers to avoid the need to obtain a letter of credit from ESG-sensitive foreign banks that are increasingly reluctant to finance oil from the Amazon basin. The move was part of a series of adjustments to the terms and conditions of oil sales aimed at boosting competition in a market typically dominated by a handful of buyers.

Trafigura had made a standard offer of -$5.6/bl for the fuel oil and a parallel -$5.83/bl offer under the new terms.

PetroEcuador also opened a purchase tender for 280,000 bl for transport-grade premium diesel for delivery to Punta Arenillas and Tres Bocas on 1-3 November.

Trafigura offered a premium of $1.28/bl to the US Gulf coast ULSD price. BB Energy offered $0.75/bl.

The cargo is expected to be awarded tomorrow.

By Alberto Araujo and Patricia Garip