Canada passes bill easing Petro-Canada ownership rules

Ottawa (Reuters) - A bill to relax ownership rules for Petro-Canada, the country's largest oil and gas producer, was passed by the Canadian Senate on Tuesday night, the final legislative step before it becomes law.

"It's waiting for Royal Assent," said Korry Duckworth, special assistant to Sharon Carstairs, government leader in the Senate, the upper house of Canada's Parliament. The bill will double the current limit on individual share ownership in Petro-Canada to 20 per cent and eliminate a rule that restricts foreign ownership to 25 per cent of the stock.

The government has yet to say when it might sell its remaining 18 per cent stake in the integrated oil company. Ottawa has long said it will sell its remaining 40 million shares, currently
worth C$1.7 billion ($1.2 billion), when it deems market conditions to be favourable.

Mediterranean fuel oil tanker rates take a hit

London (Reuters) - Freight rates for small fuel oil tankers in the Mediterranean have taken a long-anticipated hit, brokers said yesterday. "Demand fell off a while back and there's been a build up of old ships, it was bound to happen," said a London tanker broker. who pegged the cross-Med trade for 30,000 tonners at around W185, compared to W210 two weeks ago.

Italian brokers said on Wednesday that rates of W170-180 were currently the norm, and blamed holidays in Russia for a lack of fuel oil activity out of the Black Sea. Traders said on Tuesday that low sulphur was relatively balanced with little in the way of fresh demand and few if any cargoes now available. Cargoes were valued in the $129-$131 cif region.

"Low sulphur seems to have been disappearing from the market," one regional trader said. "In terms of the Russian programme in June - from the likes of Novorossiisk and Tuapse - there seems to be little left." High sulphur was also quiet with outright prices pegged at around $118-$122 cif.

Italian brokers said Vitol had booked two 25,000 tonners for end-month cargoes: one from from Priolo to Bizerta at $200,000 lump sum and another from Falconara to Tunisia at $210,000 lump sum.

London brokers said that two 30,000 tonners had been fixed for voyages from Israel to Turkey at $150,000 lump sum each. Italian brokers said that eastbound business had largely dried up, with the exception of one fixture to India's Reliance for a 50,000 tonne cargo from Ras Laffan to Jamnagar. Cross-continent trades are currently estimated at W210 for 25,00 tonne cargoes.

Pertamina says won't reduce supply to cut subsidy

Jakarta (Reuters) - Indonesia's state-owned oil firm Pertamina said yesterday it would keep its annual domestic oil supply target at 54 million kilolitres (340 million barrels), despite a request from parliament to reduce it.

Pertamina President Baihaki Hakim on Wednesday told reporters parliament had asked the company to lower the supply target to 52.7 million kilolitres, as part of efforts to cut state subsidies for oil.

Indonesia is hobbled by a gaping budget deficit, weakening currency and rising inflation, and any attempt to cut oil subsidies, which account for nearly 78 per cent of the 53 trillion rupiah ($4.71 billion) in overall subsidies, could help ease the burden.

"We have been asked (by the parliament) to lower it to 52.7 million kilolitres but it really is difficult," Pertamina President Baihaki Hakim said. "Any figure lower than that could hurt the nation's industries." Hakim did not say by how much such a reduced target could cut subsidies.

He said another reason parliament had asked Pertamina to lower its domestic supply was because it would help reduce oil smuggling. Government subsidies pushed domestic fuel prices below international prices and prompted illegal exports of oil. "Reducing supply will not guarantee less smuggling activities," Hakim said.

U.S. refinery, gasoline output hit record in May

Washington (Reuters) - U.S. refineries processed a record 15.8 million barrels of crude oil a day into petroleum products during May, pushing gasoline production to an all-time high of 8.571 million barrels per day (bpd) for the month, the American Petroleum Institute said on Wednesday.

In an addition to May's record, U.S. refinery input was one of the four highest ever for any month, API said. Despite record gasoline production, motor fuel deliveries rose less than 1 percent from a year earlier to 8.573 million bpd, the trade group said in its monthly petroleum statistics report.

High fuel prices, which hit a record pump price of $1.704 a gallon during the month, helped discourage demand, API said. Deliveries, a good indicator of demand, are calculated by API to reflect petroleum products moved from refineries and bulkstorage to wholesale and retail suppliers.

"Because demand was weak and supplies bountiful, inventories increased by 9.3 million barrels between April and May to 209.3 million barrels," the trade group said.

Overall demand for petroleum products, excluding exports, averaged 19.427 million bpd in May, up 0.4 percent from a year earlier and up 3.3 percent in this year's January-to-May period.

However, expected revisions to last year's demand data from the Energy Information Administration will likely result in demand for this May actually falling 1 percent from a year earlier, API said.

Separately, U.S. oil production averaged 5.841 million bpd in May, up one per cent from last year. Alaska's May oil output of 986,000 bpd was up 2 percent, the state's first year-over-year production increase since 1996.

Crude oil and refined product imports of 11.8 million bpd in May were up 8 per cent from a year ago and accounted for 61 per cent of domestic petroleum use during the month.