A new oil trading venture between chemicals group Ineos and refiner PetroChina was launched this week, marking the entry of a Chinese company into trading benchmark Dated Brent crude, said traders Tuesday. Staff at Ineos previously working at Morgan Stanley's Canary Wharf office in London moved to PetroChina's London office Monday, sources at both companies told Platts. Ineos and PetroChina were not available for comment.
Morgan Stanley had performed the buying of crude and selling of products for Ineos' Grangemouth and Lavera refineries since 2007, but sources said last month the agreement would come to an end in April. Morgan Stanley and Ineos declined to comment at the time.
PetroChina bought a stake in the refineries in July last year and later announced it would share a trading unit with Ineos. The new JV, called PetroIneos Trading Limited, has been incorporated and is now operational, a source at the new company said.
While PetroChina was already active in the contract-for-difference market -- one of the main instruments used to hedge physical crude cargoes in Europe, the Mediterranean basin and Africa -- the new trading unit will increase trading volumes, the source added.
"We are trading CFDs and are trying to get involved in cash BFOE," the trading source said. "It is up to Morgan Stanley to decide whether they keep trading these instruments...we have no connection to them."
PetroIneos is expected to purchase crude and sell products for both refineries, which mainly consume North Sea light sweet crudes such as Forties or Ekofisk, Urals and West African crude, according to traders. However, Morgan Stanley will continue to supply at least part of the refineries' requirements in crude for at least a year, they added.
"Clearly PetroIneos have taken over supply from about now," said one regular North Sea trader. "But how much Morgan Stanley is still doing for Grangemouth is unclear...they have not hired anyone new, there will be a transition period," he added.
The 210,000 b/d Grangemouth refinery is a large consumer of Forties crude, a benchmark North Sea crude associated with Dated Brent. It sits on the Forties pipeline system and does not have to pay any freight costs when buying the grade, unlike other European refineries.