Sri Lanka's state-owned Ceylon Petroleum Corp., the country's sole importer of fuel oil, has made a rare export offer of the product due to falling demand from power stations as well as higher domestic output, company sources said Friday.
"We have had a lot of rainfall over the last few months and power stations have now switched to hydropower instead of burning fuel oil," said Ceypetco commercial manager C.P. Samaraweera.
Demand from Ceylon Electricity Board, the sole buyer of fuel oil for supply to the country's utilities, has fallen by over 25% to 3,150 mt/d currently, said a source at Ceypetco's sole refinery.
CEB used to buy 4,250 mt/d of fuel oil -- comprising 2,500 mt/d of 180 CST high sulfur fuel oil with maximum 3.5% sulfur, 1,000 mt/d of 180 CST low sulfur fuel oil with maximum 1.8% sulfur and 750 mt/d of heavy fuel oil with maximum 3.5% sulfur -- when domestic utilities relied only on burning fuel oil, said the refinery source.
"Now they are taking only 1,400 mt/d [of 180 CST HSFO] instead of 2,500 mt/d," he said. CEB has maintained the volume of LSFO and heavy fuel oil that it buys from Ceypetco, he added.
Sri Lanka has two distinct monsoon seasons, usually over May-July and October to January with the latter continuing for longer this year.
Ceypetco's switch since August 2012 from refining crude oil from the National Iranian Oil Company to fuel oil-rich Oman crude has also led to an increase in domestic fuel oil output, said Samaraweera.
"Iranian crude typically has a 40% fuel oil yield, while it is about 55% for Oman crude, and around 25% and 30% for Miri Light and ESPO," said the refinery source. "The refinery takes Oman, Malaysia's Miri Light, and ESPO, but Oman comprises the lion's share of crude throughput."
Iran had routinely supplied crude oil to the country's sole 50,000 b/d refinery in Sapugaskanda until August, when Sri Lanka's letters of credit for imports from Iran stopped being accepted due to US sanctions against the Middle Eastern country, Sri Lanka's Petroleum Minister Susil Premajayantha was reported as saying in October 2012.
Ceypetco is currently in the spot market looking to sell via tender 20,000 mt of 180 CST fuel oil with maximum 3.5% sulfur for early-May loading from Dolphin Pier, Colombo. The tender closes April 16, with bids to remain valid until April 19.
Company sources said that Ceypetco has occasionally exported fuel oil, but were not able to provide details.
The company has also canceled a tender to buy 35,000 mt of 180 CST LSFO for April 25 delivery into Colombo, said another Ceypetco source. That tender closed Thursday, but offers were to remain valid until Sunday.
"There is only so much that we can store ... the tanks are running full," said a second refinery source.
