* At least 10 refiners in northeast Asia decline extra Saudi
* Some refiners get more light crude, less of the heavier
* One refiner in India, one in Southeast Asia to buy more
* Aug supply to Europe seen unchanged
By Alejandro Barbajosa and Risa Maeda
SINGAPORE/TOKYO, July 11 Saudi Arabia's offer of
additional crude in August drew scant interest from refiners
across northeast Asia who declined supplies beyond contracted
volumes, while one buyer each in India and Southeast Asia
accepted extra barrels of light oil.
Ten refiners in China, Japan, South Korea and Taiwan turned
down the Saudi offer, traders said on Monday, as oversupply of
high-quality Russian ESPO crude prevails in the region and
China's crude imports tumbled 11.5 percent in June from a year
earlier to their lowest in eight months.
Limited demand for extra barrels from Asia, the world's
fastest-growing market, would leave the Saudis with few options
to find homes for additional cargoes. Top exporter Saudi Aramco
was expected to have raised output to near 10 million barrels
per day (bpd) in June.
"If buyers do not ask for more, I think Aramco will not
provide more," said a trader with one of the northeast Asian
refiners. "Maybe they will switch the grade only. Arab Heavy is
still tight for summer."
Sources with European oil companies said they would receive
the same contracted volumes from Saudi Arabia in August as they
did in July. At least one source said Aramco did not actively
ask if there would be any additional requirement.
"Volume-wise, August is same as July. Everything is
according to what we want," one source with an oil company that
had received its allocation, said.
"They used to say, 'if there is any additional requirement,
let us know and we can discuss.' But not recently."
SLATE BECOMING LIGHTER
The composition of the kingdom's exports to Asia is getting
lighter. At least three refiners of those receiving steady
overall amounts will get more of the lighter crude and less of
the heavy grades next month, traders said.
Saudi Arabia is aiming to increase exports of light crude to
compensate for the disruption to high-quality Libyan oil
exports, crimped by the country's civil war for the past four
months. The kingdom had so far aimed those additional volumes of
Arab Extra Light at refiners in the Mediterranean.
Saudi oil minister Ali al-Naimi last month pledged to meet
an expected increase in demand in the third quarter after the
Organization of the Petroleum Exporting Countries (OPEC) failed
to agree to a collective production increase.
The kingdom's output in June was expected to be more than 1
million bpd above the May average. Some of the incremental
output, typically Arab Light and potentially Arab Heavy, may be
staying in the kingdom to fuel power generation to meet peak
Some traders said the southeast Asian refiner buying more
crude was probably Thailand's PTT, a traditional importer of Abu
Dhabi Murban crude from the United Arab Emirates. A 50-cent drop
in the OSP of Arab Extra Light crude in August is rendering the
Saudi grade more competitive than Murban, they said.
Four buyers took additional July barrels, three in India and
one in Japan, and another two will take more in August. Five of
the six buyers are outside northeast Asia, the continent's key
market for Russian ESPO crude, which traders have said remains
more competitive than Arab Light.
Aramco cut the official selling price (OSP) of flagship
export grade Arab Light by a smaller-than-expected 10 cents last
week. It raised the Arab Heavy OSP by 75 cents, surprising Asian
refiners who had hoped for lower prices as part of the kingdom's
strategy to sell more in the region.
So far, India is the only major Asian buyer consistently
asking Saudi Arabia for more oil. Hindustan Petroleum Corp Ltd
will ask for extra crude next month, a source at the
state-run refiner said.
(Additional reporting by Cho MeeYoung in Seoul, Judy Hua in
Beijing and Ikuko Kurahone in London; Editing by Clarence