Singapore — The strong uptrend in international outright crude prices has prompted Thailand to actively diversify its crude supply sources so far this year and the country may earn the title as the most flexible sweet crude importer in Southeast Asia, with state-run PTT picking up more than 10 different low sulfur grades from across the globe since the second quarter.
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Battling against rising benchmark crude prices and sharp depreciation in domestic currencies, some of the major Southeast Asian energy consumers including Indonesia and Vietnam have been urged to maximize the use of domestic crude production to slash their energy import bills and current account deficits.
However, with Thailand's own domestic crude production only enough to cover around 20% of its overall refining requirements, it had stepped up efforts to seek the most economical spot crude cargoes from as far as the US and Libya, industry sources said.
"[PTT] is not exactly that flexible ... but not afraid to try new and different options," a trade source at the state-run Thai company said, adding that Thailand remains keen to import more US crude.
The long list of low sulfur crude grades snapped up by PTT in the international spot market over the past several months includes Australia's Gippsland Blend and Cooper Basin crude, the US Bakken crude and WTI Midland, Nigeria's Agbami, Vietnam's Hai Thach condensate and Libya's Wafa condensate.
Most recently, PTT bought via spot tender 300,000 barrels of Libyan Bu Attifel crude for the very first time, trade sources with close knowledge of the deal said.
The cargo is expected to reach Thailand's IRPC refinery in Rayong around November 5-20.
Bu Attifel is a light sweet crude with gravity of 43.6 API and sulfur content of 0.03%, according to the assay of the grade seen by S&P Global Platts.
Sources said the company likely picked the Libyan crude grade over others as Southeast Asian sweet crude grades were not competitive currently.
Malaysian light sweet Kimanis crude for one, which often feeds refineries in Thailand, saw its spot differential surge to an 11-month high earlier this month.
Platts assessed the grade at a premium of $4.35/b to Platts Dated Brent on September 4, its highest differential since October 2017.
THAI BAHT ADVANTAGE
Thai currency baht's outperformance in the regional money market may have helped Southeast Asia's second-biggest economy insulate against rising oil prices to some extent, placing PTT in a much more comfortable position than other Southeast Asian refiners to shop for crude across the globe, energy market analysts said.
The Thai currency has been strengthening against the US dollar so far during the third quarter and emerged as one of the top performers in the Asian foreign exchange market. The dollar/baht pair fell from Baht 33.33 in mid-July to 32.34 Thursday and the pair remains steady for the year so far, hovering near the Baht 32.30-32.60 range seen during the first week of January.
"Stronger currency doesn't necessarily give you the right to go out and buy expensive crude ... but it gives you the confidence to go try different options," said J.W Shon, commodities and energy market research analyst at SK Securities.
In stark contrast, Vietnam's dong and Indonesia's rupiah were among the slew of emerging market Asian currencies to take a significant hit so far in Q3 amid widening current account deficits and macro-economic uncertainties surrounding the US-China trade war.
The dollar/dong exchange rate surged above Dong 23,300 to reach an all-time high last month, while the dollar/rupiah surged above Rupiah 15,300 earlier this month to hit a fresh 20-year high, according to 24-hourly dollar/dong and dollar/rupiah candlestick charts seen by Platts.
Reflecting Indonesia's faltering spending power, state-run energy firm Pertamina has failed to extend previous years' spot cargo buying spree from Africa and the Mediterranean markets in 2018, market sources said.
Latest data from Statistics Indonesia showed that the country's crude exports and imports both tumbled 9% and 37% year on year respectively in July amid Jakarta's ongoing efforts to maximize the use of local resources to slash energy import bills.
In Vietnam, state-run Binh Son Refining and Petrochemical Company's refinery at Dung Quat continues to feed primarily on domestic medium and heavy sweet grades including Bach Ho, Su Tu Den, Thang Long and Ruby.
"In general, [Dung Quat] always prefers domestic crude," an industry source with close knowledge of the refinery operation said.
The country's new 200,000 b/d refinery at Nghi Son depends on Kuwait for the majority of its crude feedstock requirements and the plant has not been seen procuring other crude grades from the international market, industry sources said.
-- Gawoon Philip Vahn, Philip.Vahn@spglobal.com
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-- Edited by Irene Tang, email@example.com