The volume of crude oil leaving the Black Sea port of Novorossiysk has doubled, but where is it headed?
By Julian Lee (Bloomberg) Asia is still buying cheap Russian oil that European buyers don’t want.
The country’s seaborne exports of crude oil rebounded in the seven days to April 22. A fifth of the amount shipped from Black Sea ports, Baltic and Arctic coasts on tankers does not show a final destination, and most of it is expected to end up in Asia.
40 tankers have loaded about 28 million barrels from Russian export terminals, according to ship-tracking data and port agent reports compiled by Bloomberg. This brings the average flows of seaborne crude oil to 4 million barrels per day, up 25% compared to the week ending April 15. The weather played a big role.
The jump in oil exports means an increase in Moscow’s revenue as President Vladimir Putin escalates his war in Ukraine, while the United States and the European Union discuss options to wean Europe off Russian oil. At current rates of crude oil export duties, the week’s shipments would have earned the Kremlin about $232 million; That’s $46 million more than the previous week.
Russia exports crude from four main regions: the Baltic Sea in northwest Europe, the Black Sea, the Arctic, and terminals on the Pacific coast. From three of the four regions, flows to Asia or unknown destinations rose.
Weekly freight numbers can fluctuate depending on when tankers depart, which is also heavily influenced by weather at ports – as has been the case for the past several weeks.
Last week saw overall volumes rise from all four regions. Flows of Ural and Siberian Light Crude from terminals in the Baltic and Black Seas rose by 663,000 barrels per day, or 36%. The volume of crude oil leaving the Black Sea port of Novorossiysk more than doubled as the backlog of ships built up during bad weather last week began to emerge.
Meanwhile, shipments from the country’s three eastern ports on the Pacific coast rose by 105,000 barrels per day, or 10%. Shipments from Murmansk, which handles crude oil produced along Russia’s Arctic coast, also rose by 29,000 barrels per day, or 9%.
This month, Russian seaborne crude shipments as of April 22 averaged 3.2 million barrels per day. In the whole of 2021, they averaged 2.88 million per day.
US and EU officials are in conversations On steps the European Union could take to restrict oil imports from Russia and reduce Moscow’s income from sales. Options include import bans, a price cap, and a payment mechanism to withhold revenue. Russia Produce In the first two weeks of April it was down about 800,000 barrels per day from March.
There has been little impact on Moscow’s earnings from crude oil exports so far. The recovery of crude oil flows from Russian export terminals in the eighth week after the invasion boosted the Kremlin’s export duty revenue by 25% on a weekly basis.
Crude export duties were set at $61.20 per tonne in April, equivalent to about $8.30 per barrel. This is up from $58.30 a ton, $7.95 a barrel, in March and is calculated from the average price of the Urals during the period from February 15 to March 14. Export duties will drop to $49.60 a ton, $6.81 a barrel in May.
A storm warning was issued in the Novorossiysk region on April 12, halting flows from the terminal in the later part of that week, with no tankers docked at the crude oil berth between April 12 and April 15. It lowered last week, but uploads were still six days behind schedule by the end of the week.
The following charts show the destinations of crude oil shipments from each of the four export regions. Destinations depend on where ships are referring to at the time of writing, and will almost certainly change as voyages progress.
Russian oil exports from the Black Sea
Russian Baltic Exports
Russian Arctic Oil Exports
Russian oil exports from the Pacific Ocean
There was a jump in the number of ships loaded from the Baltic Sea terminals of Primorsk and Ust-Luga that showed no destination after their departure. Most of them refer to either “the orders” or Gibraltar. It is very likely that many of these ships will either end up in Asia or will transfer their cargo to larger ships, which will continue the journey east. However, the number of tankers leaving the Baltic Sea for destinations in Asia continued to decline, with only one ship indicating a destination in India.
One shipment that was scheduled to be loaded in Primorsk during the week ending April 22 appears to have slipped off the program, but most of the others are loading on schedule. Shipments ran from Ust-Luga to planning.
Eight tankers were loaded into Novorossiysk in the Black Sea in the week ending April 22, the most in any week so far this year. Approximately 40% of the crude oil loaded at the terminal was delivered to Bulgaria or Romania, the rest within the Black Sea. Another 35% go to India, and the rest are on ships offering destinations in the Mediterranean.
The ship, which loaded last week and showed its destination as Saint Lucia in the Caribbean, began carrying out a ship-to-ship transfer in the waters of Ceuta in the western Mediterranean on Sunday.
Of the four ships loaded from floating storage facilities in Murmansk, two are heading to Rotterdam, one to Le Havre in France, and a fourth to Omisalj in Croatia.
Almost all shipments of crude oil from the three eastern oil ports of Russia during the week ending April 22 went to China. Of the 11 tankers loaded at the three terminals, one completed a ship-to-ship transfer off Yeosu in South Korea on Sunday and the second is heading to Incheon. All the others are heading to ports in China.
Three ships headed to Asia from Russia’s western ports in the week ending April 22. Five other ships left without indicating a final destination.
Of these five ships, one refers to Suez, one to “orders” and one still refers to its destination as the port in which it was loaded. The other two ships show their destination as Gibraltar. This is a common signal for ships heading to the Mediterranean and there are many possibilities once they get there. They may deliver to a Mediterranean terminal, they may pass through the Suez Canal to Asia, or they may transfer their cargo to other ships.
The area off the port of Ceuta, just south of Gibraltar, has become a popular ship-to-ship transfer site for Russian crude oil. There are two very large crude carriers, or VLCCs, owned by the Vitol Group, the world’s largest independent oil trading company, which stayed in the region all week.
Ship-to-ship transfers were not completed in the week ending April 22, but Elandra Everest began transferring cargo from the tanker, Aframax Saetta, on Sunday. Three other Aframax tankers carrying Russian crude are slowly flowing in the same area and may offload their cargo at Elandra Everest.
This is the will, said Vitol stop trading Russian crude oil and refined products by the end of the year, with volumes set to “shrink significantly in the second quarter as existing contractual obligations decline.”
Asian buyers try to pull back from purchases of Russian oil
Asian oil refineries are giving up a significant export class from the Russian Far East due to sanctions against the tanker company that ships the cargo.
People familiar with the matter said buyers are now trying to undo their purchases from Sokol, which sold out for loading in May two weeks ago. The people, who asked not to be named due to the sensitivity of the information, said at least one shipment of the item was canceled for loading at the end of May, with several other refineries trying to finish purchases for June.
Sokol is sidelined by the involvement of Sovcomflot PJSC, a Russian state-controlled company that transports crude produced at the Sakhalin 1 project from the De Castries export terminal to customers in North Asia. People said the company’s carriers are struggling to get insurance from international companies after being added to the UK’s list of sanctioned entities.
While several Asian refineries stepped in to buy Russian oil after it was shunned by the invasion of Ukraine, the incident shows they still need to be careful. Marine insurance is crucial to the buyer as well as other ship owners as it provides protection from legal liabilities such as damage to cargo, collisions and oil spills. Lack of coverage may lead to lawsuits and expose counterparties to huge losses in the event of an accident.
Exxon Mobil Corp. did not respond. , which operates Sakhalin-I on behalf of an international consortium of Japanese, Indian and Russian companies, immediately responded to an email requesting comment. The major American oil company is seeking to exit the project. A Sovcomflot spokesperson declined to comment.
It is unclear what will happen to the canceled shipments. It can be re-issued via closed tenders or stored in land tanks. Sokol’s shipments, which were scheduled to be loaded in May, have been sold to buyers across China, South Korea, Japan and India. Rosneft PJSC, Russia’s largest oil producer, failed to award a tender to sell millions of barrels of Ural crude this week.
The Sakhalin-1 Sokol Stream is one of Russia’s main export grades along with the Urals and ESPO. This variety is popular with refineries in North Asia, Hawaii and even Australia, where it produces large quantities of diesel when refined. Crude oil from De-Kastri can travel to major refining centers in China and South Korea in just three to five days.
Sofcom Float provides vectors for the Sakhalin 1 project as part of a long-term agreement. The ship’s owner’s ships load the ore from De-Kastri and transport it to destinations in North Asia. Overseas buyers need to charter other carriers, which do ship-to-ship transfers off South Korea.
The circulation of Russian oil has become more secretive due to restrictions imposed on the war in Ukraine. Vitol Group, the world’s largest independent oil trader, said it will stop dealing with Russian crude by the end of the year, while major companies such as Shell Plc and Exxon Mobil Corp. are working to divest and withdraw from the country.
The oil tanker Suez Max Matala continues its journey from Murmansk in the Arctic to India. The ship was circling Sri Lanka on Monday morning and is scheduled to finish its 11,000-mile voyage at the Indian port of Paradip on Thursday, according to earlier destination indications.
Note: This story forms part of a regular weekly series tracking crude oil shipments from Russian export terminals and the export duty revenue generated by the Russian government from them.
Note: Bloomberg uses merchant vessel tracking data to monitor vessel traffic. Ships can avoid detection by turning off the transponders on board, as has been done on a large scale by Iran’s tanker fleet. There is no evidence so far that this is done by crude oil tankers bound for Russian ports.
Note: Destinations are those indicated by the ship and are monitored until the cargo is unloaded. Destinations may change during the voyage, even under normal circumstances, and the final discharge point of the goods may not be known until arrival at such port.
Note: Cargo volumes are based on loading programmes, where available, and on a combination of vessel capacity and depth in water as we have no further information.
Written by Julian Lee Siren Cheung, Sharon Cho and Digit Chakraborty With the help of Ann KohAnd Sherry Sue and Elaine Hee. © Bloomberg LP 2022