---

Pakistan State Oil (PSO) is reported to have purchased 585,000 tonnes of high-sulphur fuel oil for delivery during the first three months of 2010.

The volume secured for the period is relatively low despite the peak winter season due to high inventories, traders said. This has led to PSO extending the validity of the tender by two weeks to include March as a delivery period and thus defer cargo arrivals to beyond the first two months of the year in order to avoid further build-ups of stock.

This practice of spreading its fuel oil cargoes over 3 months is unusual for PSO. The company normally tends to purchase firm-delivery parcels for two-month periods.

The tender for nine 65,000-tonne parcels of 180- or 125-centistoke (cst) was said to have been secured by Middle East trading companies Bakri and FAL Oil - both regular PSO fuel oil suppliers - at a premium of $21.00-$24.00 per tonne to Middle East spot quotes, on a cost-and-freight (C&F) basis to Karachi.

The deal premium is understood to be lower than a previous tender for December-January cargoes of $24.00-$29.00 per tonne.

PSO normally awards its tenders to Middle East traders due to the freight advantage they have over Singapore-based firms. The company imports on average around 600,000 tonnes of fuel oil per month.

In November the figure plummeted to just 300,000-400,000 tonnes and then rose the following month to approximately 500,000 tonnes.

Once current high inventory levels are drawn down, PSO's purchasing requirements are expected to revert back to normal by around March. Fuel oil import volumes are expected to increase in 2010 compared to last year, according to market esimates.