U.S. markets close in 20 minutes
  • S&P 500

    3,862.20
    +30.81 (+0.80%)
     
  • Dow 30

    31,160.99
    +193.17 (+0.62%)
     
  • Nasdaq

    11,415.94
    +93.70 (+0.83%)
     
  • Russell 2000

    1,734.99
    -6.34 (-0.36%)
     
  • Crude Oil

    98.60
    -0.90 (-0.90%)
     
  • Gold

    1,739.70
    -24.20 (-1.37%)
     
  • Silver

    19.08
    +0.02 (+0.12%)
     
  • EUR/USD

    1.0190
    -0.0081 (-0.78%)
     
  • 10-Yr Bond

    2.9130
    +0.1040 (+3.70%)
     
  • GBP/USD

    1.1923
    -0.0028 (-0.24%)
     
  • USD/JPY

    135.9100
    +0.0680 (+0.05%)
     
  • BTC-USD

    20,399.49
    +144.94 (+0.72%)
     
  • CMC Crypto 200

    442.37
    +6.85 (+1.57%)
     
  • FTSE 100

    7,107.77
    +82.30 (+1.17%)
     
  • Nikkei 225

    26,107.65
    -315.82 (-1.20%)
     

Russia's Seaborne Crude Flows Rise While EU Tussles Over Ban

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·9 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

(Bloomberg) -- Russia’s seaborne crude exports are flowing unabated, while the European Union searches for a sanctions deal. But Europe’s avoidance of the country’s supplies is forcing barrels on longer routes to willing buyers in Asia, with India the biggest market for crude from western Russia.

Most Read from Bloomberg

Overall crude shipments edged higher in the seven days to May 27, largely shrugging off mid-month EU restrictions that trading houses see as prohibiting them from dealing with Russian state energy companies. A total of 34 tankers loaded 25 million barrels from the country’s export terminals, vessel-tracking data and port agent reports show. That put average flows at 3.58 million barrels a day, up by 4% from 3.44 million in the week ended May 20.

The EU is trying to hammer out a package of sanctions on oil imports from Russia following its invasion of Ukraine that is acceptable to all its members. Hungarian opposition remains the main obstacle, even after the EU watered down its proposal to exclude deliveries through the southern leg of the Druzhba pipeline system, on which Hungary relies for supplies to its Danube refinery.

While self-sanctioning of Russian crude by European companies has diverted flows to Asia, so far it is having little impact on the overall level of crude shipments, which have stabilized at around 3.5 million barrels a day.

Russia exports crude from four main areas: the Baltic Sea in northwest Europe, the Black Sea, the Arctic, and terminals on its Pacific Coast.

The weekly shipment figures can swing depending on the timing of when tankers depart, which is also heavily influenced by the weather at ports -- as has been the case for the past several weeks.

Flows of Urals crude from terminals in the Baltic, Russia’s primary outlet, fell further in the week to May 27, dropping by another 104,000 barrels a day, or 7%, extending the previous week’s decline. The decrease was more than offset by higher volumes from the Black Sea port of Novorossiysk, where flows rose by 167,000 barrels a day, or 24%.

Exports from Murmansk, which handles crude produced along Russia’s Arctic coastline, also increased, rising to their highest level in three weeks. Flows were up by 86,000 barrels a day, or 37%.

Meanwhile, shipments from the country’s three eastern terminals on its Pacific Ocean coast were unchanged from the previous week. There were no shipments of Sokol crude from the Sakhalin-1 project for a third week.

Moscow’s revenue from export duty rose in line with higher flows. At current rates of crude oil export duty, the week’s shipments will have earned the Kremlin about $171 million; that’s $7 million more than the previous week and the highest weekly figure in three weeks.

In the four weeks to May 27, average weekly export duty revenues were $170 million, down by $48 million from the average for the four weeks to April 29. The drop reflects both lower flows — down by 220,000 barrels a day, or 6% — as well as a lower export duty rate, which is 9% lower in May than it was in April. Crude oil export duty is set at $49.60 a ton, equivalent to about $6.81 a barrel, in May. That’s down from $61.20 a ton, or $8.30 a barrel in April. Duty rates will fall by another 10% in June, reflecting lower prices obtained for Urals crude over the month to May 15.

The number of cargoes shipped from Russian ports rose by two to 34 in the week to May 27 compared with the previous seven days. Fewer ships departed from ports in the Baltic, while shipments from the Black Sea rose. In the east, the numbers of tankers leaving the three export terminals remained unchanged.

Shipments of Sokol crude from the Pacific port of De Kastri have ground to a halt. The last two cargoes on the April program were missed and there was only one loading in the first 20 days of May. Three Russian-owned shuttle tankers that regularly carry the grade are anchored empty off the loading terminal.

Crude Flows by Region

The following charts show the destinations of crude cargoes from each of the four export regions. Destinations are based on where vessels signal they are heading at the time of writing, and some will almost certainly change as voyages progress.

The volume of crude on ships loading from the Baltic terminals at Primorsk and Ust-Luga fell further in the week to May 27, dropping to the lowest level since mid-March. The volumes on tankers showing destinations in Asia and the Mediterranean also both fell, with shipments to Asia slipping to a four-week low. Flows to traditional buyers in northwest Europe shrank to equal their lowest level so far this year.

Crude shipments from Russia’s Baltic ports are still going according to plan. All cargoes scheduled to load at Primorsk and Ust-Luga during the week to May 27 were shipped within a day of their planned loading dates.

Eight tankers completed loading at Novorossiysk in the Black Sea in the week to May 27, the largest weekly number of vessels handled at the terminal so far this year. Shipments to Asia rebounded, with two vessels heading to India, each carrying 140,000 tons of Urals crude. The other six tankers remained in the Black Sea/Mediterranean region, with more than half of the shipments from Novorossiysk heading across the Black Sea to Bulgaria or Romania.

All of the cargoes scheduled from Novorossiysk during the week loaded within two days of the dates on loading programs seen by Bloomberg.

Two ships loaded from Gazprom Neft’s Umba floating storage facility at Murmansk, both heading for Rotterdam. Another vessel took a cargo from the Kola storage tanker used by Lukoil and is heading to the company’s ISAB refinery on the Italian island of Sicily.

Combined shipments to Asia from Russia’s western export terminals rose to 920,000 barrels a day in the week to May 27, up by 45,000 barrels a day from the previous week. More than three-quarters of those shipments are heading for ports in India, according to destination signals, making the country by far the biggest buyer of seaborne crude from western Russia.

Crude flows from Russia’s three eastern oil terminals were stable during the week to May 27, with no shipments of Sokol from De Kastri for a third straight week.

Eight tankers loaded ESPO crude at Kozmino, unchanged from during the previous week. Russia looks set to meet, if not exceed, its program to load a record 33 cargoes in May.

China is emerging as virtually the only buyer of Russia’s Pacific crude grades, taking all but two of the cargoes loaded in the last four weeks. The two vessels that loaded in the week to May 27 currently showing no clear destination are heading to Yeosu in South Korea, where they are expected to complete ship-to-ship transfers to the Chinese supertanker Yuan Yue Hu, anchored off the port. Small tankers owned by China’s Cosco Shipping Holdings Co. are increasingly used to shuttle ESPO crude from Kozmino to Yeosu, where it is transshipped onto larger vessels, also owned by Cosco, for onward delivery to China.

There were no shipments for a third week from De Kastri, which handles Sokol crude from the Sakhalin 1 project. Three Sovcomflot tankers have been anchored empty off the oil terminal since late April, with just one cargo loaded in the first week of May and delivered to Dalian in China. Nine cargoes that should have been shipped since late April, according to a loading program seen by Bloomberg, have been missed.

One cargo of Sakhalin Blend crude was loaded from the terminal at the southern end of the island. Like all those from Kozmino, it is heading to China.

Long Voyages and Cargo Transfers

The number of tankers heading from Russia’s western export terminals to destinations in Asia rebounded in the week to May 27. Six ships are headed to India via the Suez Canal, with another one showing its destination as Port Said, a regular signal for ships intending to transit the Suez Canal. One tanker, which loaded at Primorsk in the Baltic, is heading to China and another is showing a destination of Gibraltar.

Several tankers that loaded in earlier weeks are still not showing final destinations, with most continuing to indicate Port Said.

There were two observed ship-to-ship transfers of crude from Russia’s western export terminals in the week to May 27. A cargo of about 100,000 tons of Urals crude was transferred from the Aframax tanker Stemnitsa to the VLCC Nave Universe off Fujairah. Both vessels were chartered by Vitol, according to ship-tracking data.

Separately, a similar cargo was transferred from the Aframax Aurora to the Russian-owned NS Creation off Kalamata in Greece. The reported destination of the NS Creation is Vadinar in India, the same as had earlier been signaled by the Aurora.

The Aframax tanker Nissos Delos began discharging its cargo of Siberian Light at the Sri Lankan port of Colombo on May 27, having been anchored there since April 25 while the island nation’s government sought funds to pay for the crude. The next cargo of crude is due to arrive at the Indian Ocean island in mid-June, according to a tweet from Minister of Power and Energy Kanchana Wijesekera. There is no indication whether this cargo will be of Russian origin.

Elsewhere, the Aframax tanker Zhen I, which completed loading a cargo of Urals at Primorsk on May 15, was heading out toward the South Atlantic before making a U-turn west of the island of Madeira and heading back toward Europe.

Note: This story forms part of a regular weekly series tracking shipments of crude from Russian export terminals and the export duty revenues earned from them by the Russian government.

Note: Bloomberg uses commercial ship-tracking data to monitor the movement of vessels. Ships can avoid detection by turning off on-board transponders, as has been done widely by the Iranian tanker fleet. There is no evidence yet that this is being done by crude oil tankers calling at Russian ports.

Note: Destinations are those signaled by the vessel and are monitored until the cargo is discharged. Destinations may change during a voyage, even under normal circumstances, and the final discharge point for the cargo may not be known until that port is reached.

Note: Cargo volumes are based on loading programs, where those are available, and on a combination of the ship’s capacity and its depth in the water where we have no other information.

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.