"Nothing official has been announced," said the source, but added that the state-owned company is most likely to cancel its term contract and reissue the tender at a later time. More details will be known later this week, he added.
Local media reported on Sunday that the Sri Lanka Ministry of Petroleum Industry Development had decided to reverse Ceypetco's decision to import 40,000 mt of 0.25% sulfur gasoil a month from September 2010 to August 2011, quoting an unnamed senior official at the Ministry.
When the tender was awarded to the little-known company Al-Ain, Ceypetco was set to save about $20 million on its gasoil imports via the long-term contract, a source had said earlier.
The deal was done at a discount of $4.625/barrel to Mean of Platts Singapore 0.25% sulfur gasoil assessments on a delivered basis into Dolphin Pier, Colombo, the lowest of 15 offers submitted. In addition, the offer was considered very attractive as at the time the differential for 0.25% sulfur
gasoil was assessed at parity to Mean of Platts Singapore 0.5% sulfur gasoil assessments.
Al-Ain International Petroleum had also offered interest-free payments for 365 days, which trading sources said was rare for contract terms. The interest rates in Sri Lankan tenders are usually between 3% and 4.5%, a source had said earlier.
The large discount offered by the Middle Eastern company had piqued the curiosity of trading sources in Asia and the Middle East who said the offer seemed too good to be true.
Ceypetco and Al-Ain have been in talks regarding the agreement since September. When contacted at the time, the director of Al-Ain had told Platts that there was some confusion and that the company would be supplying the term cargo but at a later date, with the first shipment to arrive in Sri Lanka in
October.
Ceypetco has bought 815,000 barrels of gasoil in the spot market for October alone, much higher than volumes in September at 110,000 barrels and in August at 300,000 barrels.
Very little is known about Al-Ain International Petroleum Derivatives except that it is a subsidiary of Al Ain International Group which owns real estate, deals in heavy equipment and machinery, and more recently petroleum products.
According to the company's website, the petroleum products division has offices in Iraq and Cyprus and works closely with Iraq, Iran, Afghanistan and Bangladesh.
It also has oil and gas partners in Russia, Kazakhstan and the Middle East, and offers refined oil products such as diesel, jet fuel, crude oil and aviation gasoline.
This is not the first time that Ceypetco has been in this situation. It was left high and dry in 2007 after a little-known UK-based commodity trader SGG LEAD failed to come up with 130 days worth of lower priced crude it promised to supply from Saudi Arabia, a company source had said. Ceypetco had
to then scramble to sign a new import deal with its existing supplier, National Iranian Oil Company.
China ChemNet will hold China SNG/CBM (International) Summit on 10-12 Nov, 2010 in Changji City of Xinjiang Province. This summit is the high-end international summit under the guidance of authorities and experts, conference topics include five major aspects of policy interpretation, industry research, business promotion, business meetings and Sino-foreign cooperation, is not only the new type coal chemical industry conference, but also the best opportunity to energy giant polymerization, government and enterprises investment, investors looking for the project. Sincerely welcome you to attend the summit. Details: http://news.chemnet.com/list/zt/meeting/2010energy/index.html
