Taiwanese state oil refiner CPC Corp. has signed its first long-term deal to buy U.S. crude, a company official said Oct. 22, one of only a few such deals by Asian buyers who normally purchase U.S. oil on the spot market.

The deal for delivery in 2019 will ensure that Taiwan, which became a regular importer of U.S. oil at the end of 2017, will get a steady supply of U.S. crude for five months from early next year.

CPC has awarded a tender to an unnamed U.S. trading company and it will receive 2 million barrels of U.S. West Texas Intermediate (WTI) Midland crude every month between February and June, the official said.

Taiwan is Asia's third-largest buyer of U.S. oil, with monthly imports averaging 3.6 million barrels between January and November, according to Refinitiv Eikon data. The imports—to replace African supplies snapped up by China—are mostly offloaded at Kaohsiung, CPC's import terminal, the data showed.

Separately, CPC has also bought 6 million barrels of spot WTI Midland crude to be delivered to Taiwan in January priced at a premium to dated Brent, the official said.

The term deal is also significant as the counterparties may have found a way to bridge a gap in pricing U.S. oil to Asia.

U.S. oil purchases in Asia have so far been opportunistic, based on arbitrage opportunities. Most buyers still prefer Middle East and Russian oil priced on cheaper Dubai benchmark or Atlantic Basin cargoes priced on Brent, rather than U.S. oil priced off WTI.

The cargoes will be priced at a differential to a formula comprising the Argus WTI Houston crude price assessment, Brent swaps and dated to front-line swaps (DFL), the CPC official said.

This allows CPC to convert WTI prices to dated Brent, which is one of two price markers used in Taiwan's domestic oil pricing, he added.

The Argus WTI Houston price assessment is a U.S. Gulf coast benchmark price assessment determined by trades done at a differential to the CME Group's Nymex Cushing futures price, according to price agency Argus Media.

The DFL is a monthly cash-settled swap based on the difference between the Platts daily assessment price for Dated Brent and the daily settlement price for the Brent front-month, or first line, futures contract, according to the Intercontinental Exchange Inc.

Global oil exchanges and CME Group Inc have also recently launched new WTI futures contracts for oil deliverable in Houston, Texas.