Buyers' "offer prices have been very close and they have invited everyone to private negotiations to get someone to pay up," said one current contract holder.

"But buyers will push for lower prices, in line with current market conditions," the trader said.

In private negotiations to start next week in Bahrain, potential buyers were expected to ask for premiums of at least 20 cents per barrel lower than 1998, traders said.

The lower prices would fairly reflect expectations of lower gas oil demand from key buyer India next year, following mostly disappointing monthly tender purchases so far in 1998, they said.

Potential buyers said they expected to pay 20-30 cents per barrel premium to Mid East prices for 0.5-per cent sulphur gas oil, 20 cents lower for 1.0-per cent grade and around 50 cents premium for 0.25 per cent.

Bids for jet fuel would alsobe accordingly lowered to flat to a 10-cent premium, they said.

Saudi Aramco's term distillate tender is the largest in the Middle East and it solicited preliminary bids through a tender which closed last Friday, with offers valid until October 30.

Aramco's tender offered 30,000 to 40,000 tonnes cargoes of jet fuel, dual purpose kerosene and 1.0-per cent, 0.5-per cent and 0.25-per cent sulphur gas oil for lifting from its refineries in Yanbu, Al-Jubail, Ras Tanura and Rabigh, which have a combined capacity of more than 1.3 million barrels per day (bpd).

Traders said the volumes for sale, unspecified in the tender, would depend very much on the prices offered.

Those who due to take part in the private negotiations in Bahrain include Cargill, Veba Oil, Galaxy, Enron, BB Energy, Elf, Total, British Petroleum, Royal Dutch Shell Group, Kuwait's Independent Petroleum Group (IPG) and Fujairah-based Bakri Trading, traders said.

Galaxy, Enron, Total, BP and Shell are among the 1998 term lifters of Aramcomiddle distillates.