London, 8 September 2011: Reuters

Oil producers from Brazil to Azerbaijan are targeting Asia to expand sales as growth falters in the U.S. and Europe, highlighting confidence that the world's fastest-growing energy market will offset any demand slump in industrialised nations. At Singapore's annual Asia-Pacific Petroleum Conference (APPEC) this week, company executives are still upbeat about booming energy consumption in the region, despite the uncertainty surrounding the pace of global economic growth.

"Many investors see bright prospects for the longer-term future of energy companies in the Asian region with an outlook for robust demand growth powered by the emerging nations," said Ric Spooner, chief market analyst at CMC Markets.

Newcomers into Asia are vying with more-established oil suppliers from the Middle East to snatch a bigger slice of a growing pie, raising little concern among the incumbents about a potential loss of market share.

"Asian demand has been growing steadily and medium-heavy sweet (crude) grades, like the Brazilian ones, are not the usual grades offered" by Middle East producers, said Guilherme Franca, global crude trading manager at Brazil's state-controlled oil company Petrobras .

Brazil is raising crude exports to Asia to 38 percent of the country's total this year, up from 34 percent in 2010, boosting market share with grades most favoured by refiners from India to China.

Commodity Prices Chart HERE

"New refineries with high conversion capacity are being built in Asia, therefore it is natural that the Brazilian crude sales increase to the Far East," Franca from Petrobras said. Petrobras is using storage tanks at its Nansei Sekiyu refinery in the Pacific island of Okinawa, Japan, as a crude distribution hub for northeast Asian clients, including other Japanese refiners and buyers in South Korea and China.

EXPANSION

Crude and products storage plays in northeast Asia are now commonplace, as far-away producers seek to shorten journey times to supply Asia's biggest markets in China and Japan, increasing their flexibility to meet prompt requirements. The trading arm of Azeri state oil firm Socar expects crude sales to Asia to rise to 7-9 million barrels a month by the end of 2011, up from 5-6 million barrels, after securing storage capacity of 5 million barrels in South Korea last month. It is also looking to lease tanks in Singapore.

"With the new storage, our sales in Asia will increase," Socar Trading Chief Executive and President Valery Golovushkin said. "We will source fuel oil from all over, India and the Persian Gulf."

Socar Trading has expanded trading of oil products in Asia to include gas oil, jet fuel and naphtha, on top of fuel oil. Company staff in Singapore will number 15 by year-end, targeting trade of around 4 million tonnes of fuels a year.

Downstream, Asia's state-oil companies are also confident that business will remain buoyant with growing domestic demand and fuel exports. Indian Oil Corp is building a 300,000-barrel per day (bpd) refinery in Paradip in the eastern state of Orissa. The company aims to start the plant by June 2013, rising to full capacity in 2014.

The International Energy Agency, adviser to industrialised nations on energy policy, last month said a global economic slowdown may stifle oil demand growth next year, warning that tightening supplies could spur more oil price volatility.

Brent crude futures fell by as much as $16 a barrel in two days in May and as much as $12 in three days a month later. Implied volatility on U.S. crude futures rose to 63 in early August, the highest since April 2009.

Ends --

Reuters - for Commodities Now.