The Shanghai International Energy Exchange (INE) and PetroChina have reached a consensus on the cross-border overseas delivery for LSFO, marking the first time a Chinese futures contract would be deliverable outside of China.
INE has signed an agreement with PetroChina International for cooperation on overseas delivery for its low-sulphur fuel oil (LSFO) futures contract ILUF1.
This could increase the liquidity and pricing influence of ILUF1. INE said that the deal is an “important foundation for China’s first futures delivery going global”.
INE did not say which storage sites or delivery points would be used, but mentioned PetroChina’s bonded marine fuel oil distribution centre in Zhoushan, China, as well as Singapore and the UAE.
The ILUF1 contract was launched in June following the introduction of the IMO 2020 regulations on sulphur content in shipping fuels.
It’s thought the contract enabling overseas delivery will help China build a regional bunkering hub in Zhoushan, to rival Singapore.
For more information visit www.petrochina.com.cn