Vitol buys naphtha cargo of damaged Hafnia tanker, sells to South Korea's LG Chem

Vitol purchased Cepsa's naphtha cargo that was on the LR1 Hafnia Nile, which collided with the VLCC Ceres I July 19 and delivered it this week to LG Chem's terminal at South Korea's Yeosu port, several trading sources familiar with the deal said Sept. 20.

This concludes a two-month saga, in which the cargo was transferred in Malaysia's Johor from the damaged Hafnia Nile to another LR1 tanker, the Hafnia Guangzhou, which delivered it to Yeosu, according to the same sources.

It is common for trading companies like Vitol to buy cargoes on the high seas and deliver them to their customers elsewhere, one such source tracking the deal said.

Earlier, Japan's ENEOS canceled the purchase of this naphtha cargo from Cepsa following the accident, S&P Global Commodity Insights reported Sept. 12.

"The deal was canceled because it was not possible for the cargo to be delivered on time, and some of the volume had also been lost in the accident," a trading source tracking the deal said on the sidelines of Commodity Insights' Asia Pacific Petroleum Conference in Singapore last week.

The Hafnia Nile completed the transfer of less than 50,000 metric tons of Cepsa's naphtha cargo to LR1 Hafnia Guangzhou in Malaysia, although part of the cargo was burnt, Commodity Insights reported Sept. 2.

Naphtha cargoes on LR1s are typically around 55,000 metric tons, while distillates can be loaded up to 65,000 metric tons, with a quantity tolerance limit of plus/minus 5%.

Cepsa declined to divulge details about the cargo volume and its buyer in response to queries from Commodity Insights in July, August and Sept. 18, while Vitol has yet to reply to a query for comment.

Having delivered the naphtha cargo to Yeosu, Hafnia Guangzhou is expected to pick up a jet fuel and diesel cargo in China for delivery to Australia, brokers said.

Almost two months after the accident, the Ceres I left for Zhoushan in China in the previous week after undergoing repairs in Sedili, Johor, trading sources tracking the ship said.

The Ceres I, operated by China's Shanghai Prosperity Ship Management, had previously carried Iranian crude, which is subject to US sanctions, according to S&P Global Commodities at Sea. The company could not be immediately reached for comment.

The Singapore-flagged Hafnia Nile has been towed away from Johor to Singapore for repairs, sources said. It has a protection and indemnity cover from Gard. The Ceres I has hull and machinery insurance from Maritime Mutual. Gard and Maritime Mutual are yet to reply to Commodity Insights' request for comment.

Singapore-based shipping conglomerate BW Group has a stake in Hafnia, which operates the world's largest fleet of LR1 tankers. Hafnia was listed on the New York Stock Exchange just over five months ago and continues to trade on the Oslo Stock Exchange. It operates more than 100 tankers.

Asian LR1 tanker freight rates are recovering from year-to-date lows hit in August, Commodity Insights data showed, amid tight supply of LRs for loading during the rest of September, according to market participants.

Daily earnings on a round-trip basis for LR1s on the benchmark Persian Gulf-North Asia routes are close to $24,000/d, up 60% from early September, according to brokers' estimates.