Factbox: Attacks on Saudi oil units affecting major Asian crude buyers differently

Singapore — Following the weekend attacks on core Saudi Arabian oil facilities, which crippled 5.7 million b/d of output, or nearly 60% of the kingdom's production, multiple Chinese state-run refiners were notified by Saudi Aramco that some of their September and October term crude supplies would be affected.

But while many Chinese refiners remain on their toes amid fears of Saudi supply disruptions, Indian, Japanese and South Korean end-users were relatively calm.

South Korea's four major refiners --- GS Caltex, Hyundai Oilbank, SK Innovation and S-Oil --- were among the first Asian oil importers to confirm their near-term Saudi crude term allocations were not affected by the attacks.

Buyers in India and Japan also echoed that sentiment, saying their term Saudi crude supply remained safe.

Saudi officials said Tuesday the kingdom's full crude production capacity would be restored by the end of November, with inventories tapped in the meantime to make up for any shortfalls.

"Details are still murky, but given the apparent damage and reports that workers have just recently been let into Abqaiq, we continue to believe that Saudi Arabia is downplaying the extent of the disruption and doing everything they can to keep supplies stable, markets balanced and tensions tamped down," S&P Global Platts Analytics head of supply and production, Shin Kim, said.

TRADE FLOWS

China

**A refinery based in South China operated by state-run PetroChina said it was due to load Arab Medium and Arab Light crude in a VLCC in late October. However, the refiner was recently notified by Saudi Aramco that the lifting of the October term barrels will be delayed by one week, a company source said.

The refinery typically procures one VLCC cargo, or around 2 million barrels of crude oil, from Saudi Arabia each month, the source said.

**A state-owned refinery based in northern China will see the loading of its term Arab Extra Light crude delayed by one or two weeks, a company source with knowledge of the matter said. The refiner was originally scheduled to load 1 million barrels of the light sour Saudi crude oil in the second half of October, the source said.

**Elsewhere, a refinery in South China operated by Sinopec received a notice from Saudi Aramco that it was unable to supply Arab Extra Light crude, and its monthly contract Arab Light crude supply will be switched to Arab Heavy as a substitute grade for September loading, a company source said. The source also said the loading of its term Saudi crude barrels for October has been delayed by a week.

**"The Arab Light and Arab Extra Light will be generally switched with Arab Medium/Heavy, but this will also depend on the needs from the refinery," said a source at another Sinopec-operated refinery in South China.

South Korea

**South Korea's biggest Saudi crude buyer S-Oil said Monday the company has not received any notification from Saudi Aramco on term allocation cuts. "We do not expect any major reduction in shipments from Saudi Arabia because we import Saudi grades under long-term contracts," a spokesman at S-Oil said.

**S-Oil has been receiving on average around 16.4 million barrels/month of crude oil from Saudi Aramco, company sources with knowledge of the matter have said. S-Oil imports 90% of its crude oil from Saudi Arabia, with the rest coming from Iraq, Algeria and Kuwait.

**About 60% of Saudi crude imported by S-Oil consists of Arab Light grade, 30% is Arab medium and 10% Arab Super Light.

**S-Oil is 63.4% owned by Aramco Overseas Co., a subsidiary of Saudi Aramco.

**Some 90% of South Korea's imports of Saudi crude are under long-term contracts of up to 20 years, according to the Ministry of Trade, Industry and Energy.

**South Korea's biggest refiner SK Innovation said it has not been affected by the recent Saudi supply disruption. "We have received no notification from Saudi Aramco on term crude supply cuts. Saudi [Arabia] will meet the contractual term volumes for cargoes loading [in the near term]. We see no major reduction in shipments from Saudi Arabia," a company official said.

**SK Innovation imports, on average, around 3.5 million barrels/month, with Arab Extra Light accounting for about 52% of its Saudi crude procurement basket, Arab Heavy making up 30% and Arab Light 18%, according to company sources with direct knowledge of the matter.

**SK Innovation has been buying a bigger volume of US crude this year. Over January-May, the company received a total of 22.07 million barrels of crude from the US, equivalent to an average of 4.4 million barrels/month of imports during the period.

**GS Caltex and Hyundai Oilbank said the companies have not been informed about any possible term supply disruption, and the two buyers see no major hiccup in shipments from Saudi Arabia.

**Hyundai Oilbank has been receiving around 1.8 million barrels/month this year, with Arab Extra Light consisting of 50% of Saudi oil intake, Arab Light 35% and Arab Heavy 15%, a company source told Platts.

**Saudi crude was not the company's number one feedstock option. Hyundai Oilbank imported on average 1 million barrels/month of Kazakhstan's CPC Blend crude in 2018, but it has doubled to 2 million barrels/month since February this year.

**GS Caltex typically imports around 3.6 million barrels/month from Saudi Arabia. Arab Light makes up the majority of its Saudi crude intake at 88%, while Arab Medium and Arab Extra Light make up the rest, a company source said.

Japan

**Japanese refiners will get their full Saudi Arabian term crude supply nominated for loading in October, despite recent attacks at oil facilities in Saudi Arabia over the weekend, Takashi Tsukioka, president of the Petroleum Association of Japan, said at a press conference Thursday.

**In a courtesy call Wednesday by the head of Aramco's unit in Japan, Tsukioka said he was assured that Saudi Aramco will supply Japanese refiners term supply volumes as nominated for October.

**Japan imported an average of 1.11 million b/d of crude from Saudi Arabia in the January-July period, accounting for about 36% of the total oil imports of 3.07 million b/d in the period, according to the Ministry of Economy, Trade and Industry data. Saudi Arabia is Japan's biggest crude supplier.

India

**Indian state-run refineries will receive uninterrupted crude supplies from Saudi Arabia in October, oil ministry officials said Thursday.

**State-owned refiners such as Indian Oil Corp., Bharat Petroleum Corp. and Mangalore Refinery and Petrochemicals Ltd. have been assured of seamless crude supplies from Saudi Arabia, officials said.

**Saudi Arabia is India's second-biggest crude supplier after Iraq, supplying around 19% of India's oil imports last year.

PRICES

**Crude futures were rising Thursday on apparent investor nervousness over the geopolitical fallout from the Saturday attacks.

**At 10:15 am in Singapore (0215 GMT), ICE Brent November crude futures rose 56 cents/b (0.87%) from Thursday's settle to $64.96/b, while the NYMEX October light sweet crude futures contract moved 71 cents/b (1.22%) higher at $58.84/b..

****The physical Dubai crude market structure rallied to a six-year high, with the spread between front-month Platts cash Dubai and same-month Dubai swap jumping to $2.99/b Thursday, the highest level since $3.09/b on September 18, 2013.

**The Dubai market structure is a key component of Saudi Aramco's official selling price calculations.

INFRASTRUCTURE

**In August, Saudi Arabia pumped 9.77 million b/d, according to the most recent Platts OPEC survey, with exports averaging 7 million b/d in recent months.

**Saudi Aramco's largest oil processing facility Abqaiq (7 million b/d) processed about 50% of the company's crude oil production in 2018, making it safe for pipeline transport.

**Abqaiq is currently processing some 2 million b/d of crude, down from 4.9 million before the attacks, the CEO of state oil giant Saudi Aramco, Amin Nasser, said Tuesday. The repairs on the facility were expected to be completed by the end of the month.

**Saudi officials said the kingdom's crude production capacity would be restored to 11 million b/d by the end of the month and the full 12 million b/d in November.

(Updates prices)

-- Gawoon Philip Vahn, Philip.Vahn@spglobal.com

-- Takeo Kumagai, takeo.kumagai@spglobal.com

-- Ada Taib, ada.taib@spglobal.com

-- Sambit Mohanty, sambit.mohanty@spglobal.com

-- Analyst Daisy Xu, daisy.xu@spglobal.com

-- Edited by Shashwat Pradhan, shashwat.pradhan@spglobal.com