Abu Dhabi Cuts November, December Oil Cargoes to Asia

By Christian Schmollinger

Oct. 29 (Bloomberg) -- Abu Dhabi National Oil Co., the United Arab Emirates state-owned producer, will cut its crude shipments to customers in Asia by as much as 15 percent, said four traders at refiners in Japan, South Korea, China and Taiwan.

Cargoes of Abu Dhabi National's Upper Zakum grade will be reduced by 5 percent in November, said the traders, who asked to remain unidentified because of company policy. In December, the company will cut term shipments of its Murban type by 15 percent, Lower Zakum by 10 percent, Umm Shaif by 5 percent and Upper Zakum by 5 percent, according to notices the traders received.

The Organization of Petroleum Exporting Countries agreed on Oct. 24 to lower their output quotas by 1.5 million barrels a day, the first cut in two years. The group is attempting to bolster crude prices that have plummeted 56 percent since reaching a record of $147.27 a barrel on July 11 in trading in New York. The reductions are supposed to start in November.

``It's hard for them to make any sudden cuts because they have to manage the relationship with their customers,'' said Tony Regan, a Singapore-based adviser with Nexant Ltd., a U.S. energy consultant. ``People had probably already chartered vessels and things like that, so they held off a bit to ease any pain.''

The United Arab Emirates is the OPEC's third-largest producer. The country will cut 134,000 barrels a day under the agreement reached last week.

Refiners in Asia have been reducing their production of fuels as demand from consumers has dropped because of high prices. Japan's oil processors are operating at 72.8 percent of capacity, the country's Petroleum Association said today. That's down from 77.2 percent last year.

OPEC will ``probably'' cut crude output quotas a second time to avoid the growth of inventories, Venezuelan Oil Minister Rafael Ramirez said yesterday in an interview on state television.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.