India sells Sudan Nile blend crude at record discount
November 28, 2008 (NEW DELHI) – India’s Oil and Natural Gas Corp (ONGC) has sold Sudanese Nile Blend crude for January loading at its deepest discount since a year back, according to a trader who spoke to Reuters.
However Sudan subsequently cancelled the tender owing to extremely low bids. State oil firm Sudapet received bids lower than discounts of $8 a barrel to Minas Indonesia Crude Price (ICP).
Sudan’s offer came after already skipping October & December spot sales for unknown reasons. The volume of the current tender is almost 50% less than the average of 1-1.2 million barrels per month (bpm).
ONGC sold the 600,000-barrel cargo to European trader Arcadia at a discount of between $5 and $6 a barrel to Dated Brent, well below the $2 discount fetched for a November cargo that ONGC awarded to Chinaoil.
The Indian firm which holds a 25 percent stake in the Greater Nile project, has briefly stopped issuing monthly tenders to sell Nile Blend, as output has fallen and it is keeping some of its equity for its subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL).
Output at the Greater Nile project, where Nile Blend is produced, has fallen below 250,000 bpd, well off the field’s 325,000-bpd peak.
Further limiting its export capacity, Sudan signed an agreement in August to export 500,000 barrels a month of crude to Kenya. It was Sudan’s third such term agreement.
Demand for Nile Blend has fallen amid weakening oil demand.
Sudan is likely to face sharp drop in revenue and officials have said that 2009 budget will cut down on expenditure and focuses on new revenue opportunities besides petroleum industry.
Oil exports represent 65% of revenue for Sudan and helped fuel its unprecedented economic growth despite US economic sanctions.
However the global financial crisis has led investors to believe that oil demand will be severely curtailed in developed nations and possibly China and India. Crude oil is down more than 60 percent from its all-time peak of $147.27 reached July 11.
(ST)