Novak sees no difficulties with the sale of Russian oil, but complains about the high price discount

(Added quotes from Putin and Novak)

MOSCOW, Jan 11 (Reuters) – Russian oil companies have no difficulty in selling oil, but there is a problem with a high discount on oil from Russia in relation to benchmark grades, Deputy Prime Minister Alexander Novak said at a meeting with the Russian president on Wednesday.

Russian President Vladimir Putin instructed Novak to prepare proposals to limit the impact of this discount on the budget.

“We need to look behind this discount so that it does not create any problems with the budget,” Putin said.

The day before, the Ministry of Energy of the Russian Federation reported that it would develop additional measures to limit discounts on the Russian grade of oil Urals , , which have increased significantly due to sanctions against the Russian Federation.

Novak hopes that the situation with high discounts on Russian oil is temporary and should decrease.

“As for oil, the main problem is the high discount as a result of the high level of freight costs. That is, the cost of freight has grown quite strongly due to the risks that carriers and counterparties experience regarding possible sanctions in accordance with the fact that they do not set a price ceiling,” Novak said.

Despite Western restrictions, Russian oil exports are proceeding normally, Novak told Putin.

“We are in constant contact with the companies, the contracting for February has been completed, and in general, today the companies do not say that they have problems,” Novak said.

Shipments of Urals and KEBCO oil grades through the Baltic ports of the Russian Federation on January 1-20 will grow by 50% compared to the same period in December, data from sources in trade circles and calculations showed

Reuters

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CEILINGS

The price ceiling for offshore supplies of Russian oil at $60 per barrel, agreed by the G7 countries, the European Union and Australia, came into force on December 5. In response to the restrictions imposed by the West, Putin signed a decree banning supplies to countries that have set the ceiling from February 1, 2023.

“Yes, counterparties sometimes demand that contracts take into account the situation associated with price ceiling restrictions. However, in the process of concluding contracts, taking into account your decree, despite the fact that it comes into force on February 1, we nevertheless set the task for companies: in December and January, when contracting for February, that they strictly do not take into account the setting of price ceilings in contracts ” Novak said.

He added that Moscow will respond to challenges related to the embargo on the import of Russian oil products and the establishment of a price ceiling for them. The West has been imposing these restrictions since February.

“We will respond to these challenges, we will report, we will take all necessary measures to ensure supplies to new markets, logistics, and transportation,” the Deputy Prime Minister said. (Olesya Astakhova, Daria Korsunskaya. Edited by Dmitry Antonov and Anastasia Lyrchikova.)

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