• 2022 May 18

    Redirection of oil exports

     
    Image source: Kozmino terminal 
    Amid the pressure of sanctions on exports of its energy, Russia is interested in redirection of oil exports  to the countries of Asia and Africa. Major global oil suppliers can share those markets with Russia but it is necessary to accelerate implementation of the Vostok Oil project, build up Kozmino terminal capacity and proceed with domestic production of ship equipment.

    The EU countries are discussing Russian oil embargo. Even if they succeed in complete rejection of Russian oil imports, the long-term trend is obvious – westwards supplies will decrease, hence the need to redirect exports eastwards and southwards. When commenting for IAA PortNews, Dmitry Grushevenko, Deputy Head of ERI RAS Center for Energy Market Studies, Leading Expert in the Energy Institute of the National Research University Higher School of Economics, said that the most likely scenario of further developments is the division of the global oil market between major OPEC+ oil producers.

    Dmitry Grushevenko. Image source: author's archive 
    “Russia directs its exports to the Asian and African countries (with a discount and higher transport costs, of course) while the Middle East producers get super profit in the Atlantic market. OECD countries gradually use their strategic reserves and pay for their sanction policy with high oil prices,” the expert outlines the most likely scenario.

    In his turn, Deputy Prime Minister Aleksandr Novak, told journalists that redirection of oil flows will be arranged through “offering the most efficient variants of infrastructure expansion. As for ESPO, it is one of the variants”.

    Oil currently transported by ESPO is handled at Kozmino terminal. In the first quarter of 2022, oil handling rose by 8% there, to 8.75 million tonnes. In the Leningrad Region, the port of Primorsk handled 10 million tonnes of oil (up 27%), Ust-Luga 6.9 million tonnes (up 1.5 times). In the Arctic, Sabetta port handled 1.7 million tonnes, Varandei – 1.6 million tonnes, Murmansk – 8.55 million tonnes. In the Southern region, NCSP handled 4.8 million tonnes. Oil from Sakhalin projects is exported via the ports of Prigorodnoye (1.2 million tonnes) and De-Kastri (2.7 million tonnes).

    Those data show that most oil is exported via the ports of the North-West Region but the situation is going to change. 

    “As regards Russian routes, exports via the Baltic and Black Sea port is expected to decrease while exports via the Far East port will continue growing. It is critically important to ramp up the construction of Bukhta Sever port for shipments of oil from Vostok Oil and Rosneft projects,” Dmitry Grushevenko believes. 

    The first phase of Bukhta Sever construction planned for implementation by 2025 is to ensure annual capacity of up to 30 million tonnes. With implementation of the second and the third phases by 2030, oil handling is to be increased to 100 million tonnes. The terminal is to be connected with the pipeline system of Transneft. In the future, the volumes of oil exported from the Arctic by the Northern Sea Route can replace those lost on the western direction.

    However, certain problems can arise with the construction of ten tankers intended for transportation of Vostok Oil products. 120,000 dwt ships of Arc7 class are planned for construction at SC Zvezda but ship equipment was planned to be imported from S. Korea, according to media reports. It is an open question if that is possible amid the current sanctions.

    Besides, the project of Multifunctional Cargo Area LLC is going to build a terminal on Sakhalin with annual capacity of 5.5 million tonnes. 

    Iranian experience of evading oil export sanctions can also be observed, namely AMS rejection, oil blending, etc.

    Russian oil expert Dmitry Grushevenko will tell more about the prospects of oil exports redirection at the XV All-Russian Forum 'The current state and development prospects of the Russian bunker services market' slated for 23-24 June 2022.

Author

Vitaliy Chernov

news@portnews.ru