CPC Will Seek Spot LPG Cargoes as Saudi Aramco Reduces Supplies

By Yu-huay Sun

Jan. 19 (Bloomberg) -- CPC Corp., Taiwan’s state-owned oil company, will seek liquefied petroleum gas cargoes in the spot market after Saudi Aramco said it will reduce supplies in February and March.

Aramco will cut LPG shipments by 35 percent from levels agreed in a contract with CPC, said Lin Maw-wen, the Taiwanese oil company’s vice president. The Taipei-based refiner has an agreement to buy 20,000 metric tons of the fuel a month from the Dhahran, Saudi Arabia-based producer.

“We’re going to look for spot cargoes so that there won’t be problems supplying the domestic market,” Lin said by telephone from CPC’s Taipei headquarters today.

Saudi Aramco is producing less LPG as crude oil output is curtailed to meet reduced Organization of Petroleum Exporting Countries quotas. LPG, a by-product of oil refining and crude oil and natural gas output, is used for cooking, heating and as a motor fuel in Asia. Demand may rise as temperatures drop during the Northern Hemisphere winter.

CPC sells 960,000 tons of LPG to domestic customers a year, accounting for 65 percent to 70 percent of the Taiwan market, Chen Jei Yuan, executive manager of the company’s LPG division, told reporters Jan. 17.

CPC produces about 500,000 tons of the fuel a year and buys the remainder from abroad, according to Chen. Saudi Aramco, the world’s largest state oil company, is the refiner’s biggest overseas LPG supplier.

The Organization of Petroleum Exporting Countries agreed on Dec. 17 to new production targets starting Jan. 1 which are 9 percent lower than its November quotas. The group is trying to stem a more than 70 percent plunge in New York crude oil futures’ from the record $147.27 a barrel reached July 11.

To contact the reporter on the story: Yu-huay Sun in Taipei ysun7@bloomberg.net