NEW DELHI: Kuwait has asked some Asian refiners to take less oil under their annual deals as the OPEC producer hopes to start full-scale operations at its Al Zour refinery later this year, three refining sources familiar with the matter said.
Lower supplies from Kuwait could tighten Middle East supplies to Asia and support prices especially as demand from China, world’s top crude importer, is expected to rebound this year.
KPC has informed some buyers that Kuwait Export Blend crude supply may be reduced under new annual contracts starting in April, sources at two Indian refiners and one Japanese refiner told Reuters.
Indian Oil Corp, the country’s top refiner, will reduce its yearly oil purchase from Kuwait by 20%, or 20,000 bpd, starting in April, according to one of the persons with knowledge of the situation.
The second Indian refining source said Kuwait has also approached his firm asking them to take less oil under next fiscal year’s term contract from April.
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KPC did not respond to a request for comment.
Kuwait has started up the second phase of the Al Zour refinery, Waleed Al-Badr, chief executive of Kuwait Integrated Petroleum Industries Company, a subsidiary of Kuwait Petroleum Corporation, said last week.
The 615,000 barrel-per-day (bpd) refinery has three CDUs with equal capacity. Consultancy FGE expects a third crude distillation unit at Al Zour to come online by August.
The Japanese refining source did not disclose how much volume KPC was looking to cut, but added that KPC has also contacted other refineries in Japan to negotiate supply reductions.
To make up for less oil from Kuwait, India’s IOC has increased its term crude volume with Iraq’s Oil Marketing Company (SOMO) by 20,000 bpd, the first source said.
IOC would be lifting 210,000 bpd oil from Iraq in 2023 compared with 190,000 bpd in 2022, he said.
Iraq’s SOMO and IOC did not respond to a request for comment.
Annual crude sales contracts between Iraq, the largest crude supplier to India, and most Indian refiners start from January.