January 4, 2021 oil and gas

Kuwait ships first low-sulphur diesel to Pakistan


Kuwait has made its first shipment of ultra low-sulphur diesel (ULSD) to Pakistan, state-owned KPC said.

The cargo was shipped on board the Al-Salam 2 for Pakistan's state-owned PSO, KPC said. The vessel departed from Kuwait's Mina al-Ahmadi on 1 January, according to Vortexa, and is due to arrive at Pakistan's Port Qasim in Karachi on 6 January.

Kuwait completed term deals in early-December to supply both 10ppm sulphur gasoil, or ULSD, and jet fuel to PSO in the first half of this year. KPC will supply 2mn t (14.9mn bl) of ULSD and 150,000t (1.2mn bl) of jet on a delivered basis at premiums of $1.95/bl and $4.25/bl to Mideast Gulf spot assessments, respectively, according to market participants.

This is KPC's first deal to sell 10ppm gasoil to PSO. Pakistan will require imports of this grade following its switch to Euro-5 emission standards for road vehicles as of 1 January.

The agreement came after KPC's refining arm KNPC began ULSD production from a new 45,000 b/d diesel production unit at its 346,000 b/d Mina al-Ahmadi refinery as part of the $16bn Clean Fuel Project (CFP).

The addition brings Kuwait's total ULSD output to 118,000 b/d, with KNPC in September commissioning another 73,000 b/d diesel production unit at the 454,000 b/d Mina Abdullah refinery.

PSO typically secures supply of 500ppm sulphur gasoil through term tenders, including one with KPC that expired at the end of last year.

'Pakistan is a strategic market for KPC as Kuwait is considered the largest supplier of diesel to Pakistan', KPC said. It is also one of the few remaining Asia-Pacific countries that still uses high-sulphur gasoil. Pakistan's five refineries — which have a total capacity of 422,000 b/d — produce Euro-2 gasoil or higher-sulphur product to meet around 60pc of domestic consumption. The remaining 40pc is met with imports.

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