* Fixed 80,000-tonne tanker Ambelos for Aug. 25 lifting from Caribbean * More-than-usual volumes from Caribbean, drawn by strong Asian market * Matter of time till Brightoil regularly sources its own supply, say traders By Yaw Yan Chong SINGAPORE, Aug 22 (Reuters) - Hong Kong-listed trader Brightoil Petroleum will move its first fuel oil arbitrage cargo from the West to East Asia, chartering a tanker to load 80,000 tonnes from the Caribbean at the end of August for delivery to Singapore in October, traders said on Monday. The fixture comes amid heavier-than-usual exports from the region, particularly from Venezuela, for a second consecutive month, drawn by strong East Asian demand that resulted in high bids for the heavy, high-density cargoes. "The arbitrage from the Caribbean and US Gulf Coast is wide open and it's no surprise that Brightoil finally fixed something, given that they have a trading office and storage facilities in the U.S. that have been in operation for more than six months now," a Singapore-based Western trader said. "The only surprise is that they are bringing the cargo in a small aframax and not a VLCC (Very Large Crude Carrier), as is the case with most players, to maximise the economies of scale." It fixed the aframax Ambelos to lift a cargo, from its own storage facilities in Freeport in the Bahamas, around Aug. 25 and for delivery into Singapore, expected around early October, traders said. The cargo is expected to be a combination of low-grade slurry, which has high density, high metals and high sulphur content, from the United States and better-grade Mexican fuel oil of lower sulphur content, they added. "They got the slurry at quite a low price, although the Mexican component wasn't that cheap," another trader, based in the United States, said. Brightoil expanded its trading capability last year after hiring a group of more than 20 trading personnel, including senior traders as well as operations and support staff, mainly from Singapore and the United States, from oil major BP. Since this group started operations around the fourth quarter last year, it has mounted at least three trading plays, including the latest one just a month ago, where it sold more than 800,000 tonnes of physical cargoes and another about 1.5 million tonnes of swaps. The China-based firm, which started trading distillates recently, has a large supply-chain system for fuel oil, with the marine fuels market being its main outlet. Brightoil has established a market presence in most of the world's major ports, selling about 2.5-3.0 million tonnes of bunker fuel globally, for the year ended June 2010, and is also a major player in China's rapidly-growing marine fuels market, estimated at around 17 million tonnes a year. A substantial portion of its supply come from the trading system in Singapore, where it has about 350,000-400,000 cubic metres of storage capacity, comparable to the region's largest players, and plans to expand its storage capacity in China to nearly 15 million cu m over the next few years. LOOKING TO START EUROPEAN OFFICE Brightoil is also looking to start a trading office in Europe, the other primary source of Western arbitrage cargoes. Last November, it tried to bring a Caribbean-origin cargo into Singapore on board a VLCC, but the booking failed. "The economics probably wasn't right then, but it is always a matter of time, given their large supply system, before they source their own cargoes, rather than buying from other cargo players as they do now," another trader said. The East Asian fuel market is expected to be tight for a second consecutive month in September, and the strong supply-demand supply fundamentals have drawn larger-than-usual volumes, mostly for October-arrival, from the Caribbean, particularly from Venezuela, the region's largest supplier. Demand has been so strong that its national oil company, PDVSA, is selling raw, unblended fuel oil via spot tenders, in addition to its regular supply of 2-3 VLCC-loads to term buyer PetroChina. Other non-regular players, such as Vitol, Glencore, Trafigura and BP, has been seen arbitraging the cargoes into East Asia, since PDVSA sold July-loading lots. Traders said there are at least three spot cargoes for August loading, including the latest 1-million barrel parcel, for Aug. 31-Sept. 2 lifting, that was awarded to BP at a discount of around $20.00-$25.00 a tonne to Singapore spot quotes on a free-on-board (FOB) basis. Another parcel, loading Aug. 23-25, was awarded to Vitol, while a mid-August lifting lot was fixed to be delivered to Singapore by the VLCC Maran Capricorn. The additional spot volumes have led to the reduction of PDVSA's supply to PetroChina, which has had its regular flows cut to two VLCC-loads, or 500,000-550,000 tonnes, down from its normal three, traders said. The Chinese major, which receives the fuel oil as part of a repayment to investments made by its government in Venezuela, has had two VLCCs arriving in East Asia for this month and next month. Reflecting the strong market, fuel oil's prompt September/October timespread has stayed at a month-high backwardation steeper than $5.00 a tonne since just before it entered the September pricing month over a week ago.

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