North Korea scores first term fuel oil at $139.88/T
Date: 01-May-02
Country: SINGAPORE
U.S. trader Westport Petroleum Inc. will supply KEDO monthly shipments of between 45,000 and 55,000 tonnes each of the two percent medium-sulphur fuel oil (MSFO) through this December or January next year, a Westport official in Singapore said.
For months, KEDO has had difficulty securing fuel oil for North Korea, and the term buy made sense both economically and politically, said South Korean traders reached by telephone.
The term contract, which replaces KEDO's previous monthly tenders, comes at a time when North Korea and the United States are trying to restart high-level talks that stalled when U.S. President George W. Bush took office in 2001.
"They've been considering a term contract for a long time. Now that a U.S. company offers such a low price, they cannot resist," said one trader in the South Korean capital Seoul.
Westport contracted freight at $15.15 a tonne, bringing the total per-tonne cost to around $155 - $5 less per tonne than what South Korean traders said they were currently able to offer.
Monthly shipments will be made on a free on board (FOB) basis to the ports of Nampo, Songrim and Sonbong in North Korea.
KEDO previously bought 54,000 tonnes of April MSFO for North Korea at $150-$151.50 a tonne FOB from Japanese trader Sumitomo Corp. .
Sumitomo submitted a bid for the KEDO term contract at a premium to the average of Singapore spot prices, a company official in Singpore said.
"KEDO wanted a fixed price, but that was too risky for us. I don't know how Westport did it," he said.
The U.S.-led group that provides KEDO with fuel oil as an alternative power source does so under a 1994 pact in which North Korea agreed to freeze and ultimately dismantle its nuclear power programme amid international concern that it might develop nuclear weapons.