*

Shipment is first by Petrobras from India in more than a

year

*

Tanker loaded 100,000-105,000 metric tons of ultra

low-sulphur

diesel at Sikka port - sources

*

Loading delayed due to cleaning and scrubbing of crude oil

tanker

By Trixie Yap

SINGAPORE, May 6 (Reuters) - Brazilian energy major

Petrobras has loaded diesel from India on board a Suezmax crude

oil tanker after a month-long delay, according to shiptracking

data and trade sources, the first such shipment from India in

more than a year amid volatile freight rates for clean product

tankers.

The conversion of a crude oil tanker to carry clean products

enabled Petrobras to ship bigger volumes of diesel

from Asia at lower costs, with Asian sellers also seeking demand

outlets outside this region, the sources said.

The larger shipments will likely ease downward pressure on

an oversupplied Asian diesel market and create a price floor for

the current market, the sources said. Refining margins seem

close to bottoming out at $13-14 a barrel in Asia for now, one

of the sources added.

Tanker Milton Santos, chartered by Petrobras, loaded

100,000-105,000 metric tons (745,000-782,250 barrels) of

ultra-low sulphur diesel at Reliance's Sikka port on

May 4-5 and is scheduled to reach Brazil in the first half of

June, data from LSEG, Kpler and a shipbroking source showed.

The loading was delayed for almost a month because of a

longer-than-expected scrubbing and cleaning process, two

shipping sources said.

Both Petrobras and Reliance did not respond to Reuters'

requests for comments.

The shipment comes after 360,000 tons of Russian March

loading diesel were discharged in Brazil in the past few weeks,

with around 177,000 tons of April-loading cargoes scheduled to

be discharged this week, according to shipbroking sources.

FREIGHT COSTS

Brazil became a key buyer of Russian diesel exports since

Western sanctions on Russian oil products started early last

year, with volumes averaging 540,000-617,000 tons a month, Kpler

and LSEG data showed.

Arbitrage economics for Russian diesel exports have worsened

from ongoing tensions in the Middle East and some cargoes have

also been delayed, affecting deliveries to Brazil, one trade

source said.

Freight costs for Suezmax tankers on East-to-West routes are

around 30% cheaper than the more than $60 per ton costs for

clean product long-range 2 (LR) vessels, capable of carrying

90,000-100,000 tons of diesel, a Singapore-based trade source

said.

Petrobras has sporadically been using its crude tankers to

load diesel in the past three years from India and the Middle

East to Brazil, Kpler data showed.

The switch requires crude tankers to be scrubbed clean to

make it suitable to carry diesel without contaminating the fuel

and the process takes at least two weeks, one Singapore-based

shipping source said.

However, the sustainability of this trend remains

questionable because of scrubbing, other operational costs,

arbitrage price differences and consequential crude tanker

freight dynamics, one Singapore-based trade source said.

Exports from the U.S. gulf coast have emerged as the prime

option for arbitrage into Latin America, as Asian diesel prices

remain firm, said Sparta Commodities analyst James Noel-Beswick.