MOSCOW, Jan 17 (Reuters) – Russia sharply ramped up deliveries of Urals oil from Baltic ports to Asian consumers Jan. 1-15, while the Dec. 5 EU embargo on maritime imports of the variety has only accelerated the reversal of exports to the east, data from traders and Refinitiv Eikon showed.
Export and transit of oil from Primorsk and Ust-Luga in the first half of January increased to 3.4 million tons from 2.5 million tons on December 1-15. At the same time, the supply of Russian resources by 35% to 3.1 million from 2.3 million tons on December 1-15, according to Reuters sources.
The growth of exports of the variety from these ports to Asia on January 1-15 will be about 27% compared to the corresponding period in December – up to 2.8 million tons from 2.2 million tons, according to Reuters.
According to market participants, the main countries that continue to purchase Urals in January, as in December, will remain India and China, and the emergence of new logistics schemes using transshipment under the STS scheme, including supertankers ( VLCC) and growing demand for the variety promise to improve the economics of oil exports.
“In January, even a slightly boring structure: no drastic changes in terms of delivery directions. We are waiting for China to wake up, and shipments with loading in Russian ports in January-February may arrive there just in time – by the time demand is revived, ”a source at a large Western company told Reuters.
According to trade sources, at least four supertankers of Chinese companies were involved in the export of Urals oil to China in December 2022 – January 2023, and another VLCC is carrying the grade to India.
The use of supertankers and road transhipments allows Russia to solve two main problems: to fill the shortage of ice-class tonnage in the Baltic, which arose due to the ban on the provision of services by Western shipowners introduced by the G7 countries, and to reduce the cost of transporting the variety to Asia.
As part of the shuttle scheme, ice-class vessels load 100,000th shipments of Urals in the Baltic for transshipment to other board-to-board ships in international waters and immediately return to a Russian port for loading raw materials.
Traders estimate that recently the cost of transporting Urals from Baltic ports to India and China by Aframax tankers (70,000-100,000 dwt) has averaged about $20 per barrel – about a quarter of the proceeds from the sale of the variety, adjusted to the port of discharge.
Attracting VLCC (200,000-300,000 dwt) for oil supplies to India and China will dramatically reduce this cost item, traders say.
“Right now, VLCC’s freight rates are almost the same as Aframax’s, and the usable volume is a multiple of what it takes to save a lot,” said one trader.
Deliveries of Urals to India without transshipment at VLCC on January 1-15 will amount to at least 1.5 million tons against 1.7 million tons shipped over the same period in December, and direct deliveries to China, which were not tracked on December 1-15, are expected to be 0.2 million tons.
Another 0.5 million tons of Urals from the Baltic ports with shipment on January 1-15 is sailing towards the Suez Canal for the needs of consumers in Asia, but it has not yet been possible to establish the country of destination.
The volume of oil supplies to STS-transshipments for further delivery to Asia on January 1-15 increased to 0.6 million tons from 0.5 million tons in the corresponding period of December.