Chinese Firm Pulls Out of $680 Million Fuel Oil Deal with Rosneft

by Ship & Bunker News Team
Wednesday February 3, 2016

Fortone Group, a privately owned Chinese company, is cancelling a deal that would have seen the purchase of about $680 million in fuel oil from Russia's Rosneft, which it was intending to sell to independent refineries, Reuters reports.

Fortone Group is said to have won a Rosneft export tender for up to 3.5 million tonnes of M100 fuel oil, set for lifting during the January to December period from the port of Nakhodka.

The tender is reported to have been won with a premium bid price that exceeded prevailing benchmark quotes by approximately $55 per tonne, nearly double the premium of many other other bids.

Traders at companies that are frequent Rosneft tender participants are reported to have said that they are puzzled as to why Fortone Group - hitherto virtually unknown in this market - had put in such a high bid.

With crude prices' downward trend during the October to December period, as well as the yuan declining by almost 3 percent, the deal is said to have been made even more expensive for Fortone Group.

"The tender was issued last October but nobody expected oil prices to fall like that through December... it can't possibly be implemented," said a source who is reported to have knowledge of the matter.

Neither Fortone Group or Rosneft have provided comment, and it is currently unknown if the tender included penalties should the agreement not be honoured by either party.

Rosneft in understood to have issued tenders for the sale of 34.2 million tonnes of fuel oil set for delivery in 2016.

In December, it was reported that Trafigura Beheer BV (Trafigura) had signed a forward financing deal with Rosneft for 1 million tonnes of bunker fuel from Nakhodka in 2016.