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Reuters: Shell moves 35KT gas oil to supply-starved S.Africa

Fri 10 Aug 2007, 7:31 GMT
SINGAPORE (Reuters) – Oil major Shell is moving 35,000 tonnes of low-sulphur gas oil to South Africa this weekend, to meet healthy demand and cover for fuel shortages caused by a strike, traders and shipping brokers said on Friday.

The 0.05 percent grade will be loaded in Taiwan on August 10-12, with vessel Wabash carrying the product to Durban in South Africa. Shell declined comments.

“Already demand is strong because of the robust mining sector, but the strike has made supply even tighter,” said an Asian trader.

Fuel supply in South Africa was hit by a week-long strike at the country’s biggest SAPREF refinery, that sparked off panic buying.

Located in the coastal city of Durban, the Shell and BP joint-venture refinery makes up 35 percent of the country’s refining capacity and runs 180,000 barrels of crude oil a day.

Though the strike ended earlier this week after South African oil refinery workers agreed to a new wage deal, it takes about a week before the plant returned to full capacity.

South Africa has turned to Asia, as regular Middle East swing suppliers have sharply reduced shipments due to strong demand back home, especially with sweltering heat driving up diesel-fired generators.

Asia had exported an estimated half a million tonnes of gas oil to Africa between March and July last year, triggered by fuel shortages amid a raft of plant maintenance and lower Middle East exports.

Intensified coal mining further exacerbated the situation, as gas oil is used to power trucks and fuel generators.

Asian buyers have been snapping up South African coal due to a cut-back from traditional suppliers. Australia has reduced its shipping quotas, while flooding hurt Indonesian exports.

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