SINGAPORE, Nov 18 (Reuters) - The Shanghai International
Energy Exchange (INE) is considering using oil storage sites in
Singapore owned by PetroChina Co as a delivery point for its
low-sulphur fuel oil futures contract, according to two sources
with direct knowledge of the matter.
The INE's move would be the first time a Chinese futures
contract would be deliverable outside of China and could boost
liquidity for the contract, as well as help to influence pricing
for shipping fuel.
Low-sulphur fuel oil (LSFO) is required as ship fuel to meet
new maritime emissions regulations that went into effect this
year. Singapore is the world's biggest ship-fueling port.
The INE posted a notice on its website late on Tuesday
seeking market feedback on allowing LSFO futures contract buyers
to take deliveries outside China, but did not give a location or
a start date for the change.
However, Singapore could be used as a delivery point for the
LSFO contract before the end of the year, the two sources said.
"The new plan gives traders, especially those large bunker
fuel players in Singapore, greater flexibility to take
deliveries as they see more economic and convenient, versus say
Zhoushan (in China)," said one of the sources.
PetroChina International, a unit of PetroChina,
was Singapore's top marine fuel supplier in 2019. The company
owns a 25% stake in Singapore's Universal Terminal oil storage
site at Jurong Island in the island city-state's southwest.
An INE spokesman declined to comment on the matter.
PetroChina and Singapore's Maritime Port Authority did not
immediately respond to requests for comment.
The INE's yuan-denominated LSFO contract has traded 4.9
million lots through October since it started up in June, or
about 320 million barrels, the exchange said.
The INE and China aim to grow the contract, for fuel oil
with a sulphur content of 0.5%, into an Asian benchmark for the
ship fuel. The current benchmarks are for cargoes sold in
(Reporting by Chen Aizhu; Editing by Christian Schmollinger)