Woodside Petroleum will improve the quality of Vincent crude by increasing its flash point from July so that it can be blended into very low sulphur fuel oil (VLSFO) and capture higher premiums, two sources told Reuters.
Among crude grades, heavy sweet oil, with higher density and less sulphur, is most suitable for blending into VLSFO that meets the new marine fuel sulphur regulations dubbed IMO 2020. However, crude with a low flash point could ignite easily and can cause engine issues.
The increase in the flash point will be made possible by shutting in the Cimatti field off Western Australia, one of four oilfields that blend into Vincent crude, which was dragging down Vincent’s flash point, one of the sources said. Two Vincent crude cargoes would be exported per month, the source added.
Australian heavy sweet crude oil grades Van Gogh and Pyrenees have hit record double-digit premiums to benchmark dated Brent thanks to their blending value, benefiting producers such as BHP Group, Santos Ltd and Inpex Corp.
In January, a March-loading Pyrenees crude cargo scored a record premium of above $30 a barrel to dated Brent.
Last month, BHP sold a June-loading cargo of Pyrenees crude at a premium of more than $10 a barrel to dated Brent, at a time when most crude grades were sold at deep spot discounts in a market flooded with cheap oil amid the coronavirus pandemic.
Vincent crude is marketed jointly by Mitsui & Co. Energy Trading Singapore, a unit of Japanese trading house Mitsui & Co , and Woodside.
The companies did not immediately respond to emails seeking comment outside of business hours.
In September last year, Woodside offered the first Vincent crude cargo for export since production resumed at the $1.9 billion Greater Enfield project off western Australia.
The company operates the Greater Enfield project with a 60% stake, while Mitsui E&P Australia Pty Ltd, a unit of Mitsui, holds the remainder.
Source: Reuters (Reporting by Shu Zhang; Editing by Susan Fenton)