Russian Black Sea Oil Exports Double, Are Sanctions Still Working?

The volume of crude leaves the Black Sea port of Novorossiysk more than doubled but where is it going?

By Julian Lee (Bloomberg) Asia is still snapping up cheap Russian oil that European buyers don’t want.
Seaborne exports of the nation’s crude rebounded seven days to April 22. One-fifth of the volume shipped from ports on the Black Sea, Baltic and Arctic coasts showing no tankers, with most expected to end in Asia.

A total of 40 tankers are loaded with about 28 million barrels from Russian export terminals, according to vessel-tracking data and port agent reports collated by Bloomberg. That put average seaborne crude flows at 4 million barrels a day, up 25% against the week of April 15. The weather played a big part.

The Vladimir Putin steps up in Moscow, while the US and EU discuss options to wean Europe off Russian oil. At the current rates of crude oil export duty, the Kremlin will have about $ 232 million in weekly shipments; That’s $ 46 million more than the previous week.

The four main areas of Russia exports crude: the Baltic Sea in Northwest Europe, the Black Sea, the Arctic, and its Pacific Coast. From the Three Areas of the Four Flowers to Asia or Unknown Destinations.

The weekly shipment figures can be switched on depending on the timing of the tanker departure, which is also heavily influenced by the weather at the ports – as has been the case for several weeks.

All four regions from the past week saw higher aggregate volumes. 663,000 barrels a day, or 36%, by the Baltic and Black Sea rose in Terms of Flowers of Urals and Siberian Light Crude. The volume of crude leaves the Black Sea port of Novorossiysk more than doubled as a backlog of ships built up to clear the previous week’s bad weather.

In the meantime, shipments from the country’s three eastern terminals have risen to 105,000 barrels a day, or 10%. Cargoes from Murmansk, which handles crude production along Russia’s Arctic coastline, are also up by 29,000 barrels a day, or 9%.

This month, Russia’s seaborne crude shipments to April 22 averaged 3.2 million barrels a day. In full year 2021, they averaged 2.88 million a day.

Related Book: The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources by Javier Blas

US officials and the European Union are negotiating over the steps the EU could take to restrict oil imports from Russia and cut Moscow’s income. Options include an import ban, a price cap and a payment mechanism to withhold revenue. The first two weeks of Russia’s production in April were down by about 800,000 barrels a day from March.

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There has been little impact on crude exports from Moscow’s earnings so far. Kremlin’s export duty revenues by 25% week-on-week after the eighth week in Russia’s export terminals from the rebound in crude flows.

Crude oil export duty is set at $ 61.20 a ton in April, equivalent to about $ 8.30 a barrel. That’s up from $ 58.30 a ton, $ 7.95 a barrel, in March and is the average Urals price from the period over Feb. 15 to March 14. Export duty will fall to $ 49.60 a ton, $ 6.81 a barrel, in May.

A gale warning issued by the Novorossiysk area on April 12 halted flows from the terminal for the latter part of the week, with no tankers mooring at the crude oil jetty between April 12 and April 15. The backlog of tankers was built up Reduced last week, but loadings were still running about six days behind schedule by the end of the week.

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

Russian Black Sea Oil Exports

Russian Baltic Exports

Russian Arctic Oil Exports

Russian Pacific Oil Exports

There was a jump in the number of ships from the Baltic Terminals at Primorsk and Ust-Luga that were on their departure after no other destination. Most are either signaling “For Orders” or Gibraltar. It is very likely that many of those ships will end up in Asia or they will transfer their cargoes to larger vessels, which will continue the journey eastward. However, the number of tankers leaving the Baltic destinations in Asia continues to fall, with just one vessel signaling a destination in India.

One cargo that was scheduled to be loaded at Primorsk during the week to April 22, but most others are scheduled for loading. Shipments to Ust-Luga ran to plan.

Eight tankers are loaded at Novorossiysk in the Black Sea this week to April 22, which is the most ships in the world so far this year. Almost 40% of the crude loaded into the Terminal was supplied to Bulgaria or Romania, the remainder within the Black Sea. Another 35% is heading to India, with the remainder of the ships showing destinations in the Med.

The vessel that was loaded the previous week and showed its destination as St Lucia in the Caribbean, carrying a ship-to-ship transfer in the waters of Ceuta on 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 the fourth to Omisalj in Croatia.

Russia’s three eastern oil terminals went to the week of April 22 on China’s biggest crude shipments. Of 11 tankers loaded at the three terminals, one completed a ship-to-ship transfer off Yeosu in South Korea on Sunday and a second is heading for Incheon. All of the others are heading to Ports in China.

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Three ships head to Asia from Russia’s western ports on April 22. Another five left signaling a final destination.

Of those five vessels, one is for signaling Suez, one for “orders” and one is still signaling to its destination where it is loaded. The other two ships are showing their destination as Gibraltar. That’s a common signal for ships heading into the Mediterranean and there are many possibilities once they arrive. They may deliver a Mediterranean terminal, they may pass through the Suez Canal and on to Asia, or they may transfer their cargoes to other vessels.

The area off the port of Ceuta, just south of Gibraltar, has become a popular site for the Russian crude of ship-to-ship transfers. There are two very large crude carriers, or VLCCs, owned by the Vitol Group, the largest independent oil trader in the region, in the area throughout the week.

No ship-to-ship cargo transfers were completed in the week to April 22, but the Elandra Everest began with a cargo from the Aframax tanker Saetta, on Sunday. There are three other Aframax tankers holding Russian crude that are steaming slowly in the same area and they may discharge their cargoes into the Elandra Everest.

Vitol has said that it will stop trading Russian crude and refinished products by the end of the year, with volumes set to “diminish.”

Related Book: The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources by Javier Blas

Asian Buyers Try Out Back Purchases Of Russian Oil Grade

Asian oil refiners are shipping from a major export grade to the Russian Far East due to a tanker company that ships the cargoes.

Buyers are now looking for back-to-back purchases of Sokol, which was sold out two weeks ago, with people saying, “Knowledge of the matter.” At least one shipment of various types of end-May has been canceled, along with several other refiners seeking wind-back purchases, June said.

Sokol is avoided due to the involvement of Sovcomflot PJSC, a Russian state-controlled firm that transports the crude produced at the Sakhalin-I project from the De-Kastri export terminal to customers in North Asia. The company’s tankers are struggling to get insurance after international companies said it was a list of UK-sanctioned entities, the people said.

While many Asian refiners have stepped in to buy Russian oil, it has been shunned due to the invasion of Ukraine, the episode illustrates. Marine insurance is critical for the buyer as well as other shipowners as it provides protection against legal liabilities such as cargoes, collisions and oil spills. A lack of coverage could lead to lawsuits and subject counterparties to hefty losses in the event of an accident.

Exxon Mobil Corp., which operates Sakhalin-I on an international consortium of Japanese, Indian and Russian companies, did not respond to an email seeking comment. The US oil major is the project to seek out. A Sovcomflot spokesperson declined to comment.

It’s unclear what will happen to the canceled cargoes. They could be re-provided via closed tenders or stored in onshore tanks. Sokol shipments scheduled for loading in May were sold to buyers across China, South Korea, Japan and India. Russia’s biggest state oil producer, Rosneft PJSC, failed to win a tender to sell the barrels of Urals crude this week.

The Sakhalin-I Sokol stream is one of Russia’s main export grades along with Urals and ESPO. The variety is popular with refiners in North Asia, Hawaii and even Australia when it diesels of large quantities. The crude can travel from De-Kastri to major refining hubs in China and South Korea in just three to five days.

Sovcomflot provides a long-term agreement on the part of the Sakhalin-I project for tankers. The shipowner’s vessels loaded with crude from De-Kastri and carry it to destinations in North Asia. Other afield need from buyers include charter other tankers, which conduct ship-to-ship transfers off South Korea.

The trading of Russian oil is becoming more clandestine due to restrictions on war in Ukraine. Vitol Group, the largest independent oil trader in the world, has said it will stop the Russian crude with an end to year, while majors such as Shell Plc and Exxon Mobil Corp. They are working on divesting their investments and withdrawing from the country.

The Suezmax tanker Matala is continuing its voyage from Murmansk to the Arctic. The Indian port of Paradip on its 11,000-mile journey to India on Monday morning, according to a press release issued on Thursday.

Related Book: The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources by Javier Blas

Note: This story forms part of a regular weekly series of tracking shipments from the Russian export terminals and the export duty revenues received 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 on-board transponders, as has been done by the Iranian tanker fleet. There is no evidence yet that this is done by calling crude oil tankers at Russian ports.

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

Note: Cargo volumes are based on loading programs, where they are available, and on a combination of the ship’s capacity and its depth in the water.

By Julian Lee Serene Cheong, Sharon Cho and Debjit Chakraborty with assistance from Ann Koh, Sherry Su and Elaine He. © 2022 Bloomberg LP

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