Due to their favorable properties, light sweet crudes from the Southeast Asian and Northwest Australian region are highly sought after by refiners for use as feedstock. Therefore, there is significant competition to secure cargoes of these crude types. Due to the limited supply of light sweet crudes and the strong competition, we are not always able to secure our first choice crudes for our refinery and are required to obtain alternate crudes that are available.
We own the only refinery in Papua New Guinea. While not restricted under any agreement we have with the State, we do not envision any new entrants into the refining business within Papua New Guinea under the current market conditions. However, domestic distributors have not sourced all of their requirements from the refinery since 2009. Excess diesel, gasoline, Naphtha and LSWR that are exported are sold subject to prevailing commodity market conditions.
Our geographical position and limited storage capacity inhibits our ability to compete with the regional refining center in Singapore for sales of large cargo sizes. However, these same factors may also provide competitive advantages if we expand our exports of refined products to the small and fragmented South Pacific markets.