Russia to Export Less Oil in July-September

Crude oil exports from Russia are poised to fall by 160,000 barrels per day in the third quarter of this year, compared with planned levels for the second quarter, according to quarterly export programs approved by the Russian energy ministry. Exports of Russian oil alone -- excluding transit volumes produced in other countries -- are set to fall by 150,000 b/d, according to the combined third-quarter programs for seaborne and pipeline exports (see table). The projected decline in exports shows producers are prioritizing supplies to the domestic market after completing refinery maintenance work -- in line with guidance from the government aimed at avoiding fuel shortages and price spikes. Russian production and exports are being watched closely as Opec-plus ministers prepare to meet in early July to decide on the appropriate level of output after the recent recovery in oil prices to levels above $70 per barrel. Producers such as Lukoil and Gazprom Neft have started lobbying for a further increase in Opec-plus production in the second half of this year. Opec-Plus Heavyweights Last year's Opec-plus agreement started out with production cuts of almost 10 million b/d in May 2020, which were to be rolled back gradually over the next two years and then ended completely by Apr. 31, 2022. Under the alliance's current schedule, its members will still be withholding 5.76 million b/d of supply from the market in July, with heavyweight producers Saudi Arabia and Russia making the biggest contributions to that total. The approved export programs show that Russian producers will ship 3.939 million b/d to non-former Soviet Union markets in the third quarter of this year. Shipments to neighboring Belarus -- a former Soviet Union country -- have been penciled in at just 187,800 b/d for the third quarter, down from 362,000 b/d in the second quarter. That's because Russian producers have cut back their shipments to Belarus after the US reinstated sanctions against several state-owned companies there (IOD May28'21). Keeping Consumers Sweet Russia's actual exports during the July-September quarter may well differ from the approved programs, depending on how things play out in practice. Much will depend on Opec-plus policy decisions as well as trends in the domestic market. In the longer term, the possible return of Iranian oil to the market is another variable that needs to be monitored (IOD Jun.16'21). Russian fuel prices have risen recently and producers could come under additional pressure from the government to step up supplies to domestic refineries to avoid an angry response from consumers. The export programs show that most of the expected decline in July-September exports will come from shipments from the country's sea ports, with pipeline volumes actually expected to increase versus the second quarter. Nadezhda Sladkova, Moscow Planned Crude Oil Exports via Transneft System Q3'21 ('000 tons or b/d) Q3'21 Q2'21 Chg. Q3'20 Chg. (tons) (b/d) (tons) (b/d) (b/d) (tons) (b/d) (b/d) Baltic Sea Primorsk 9,400 748 9,600 772 -24.3 9,800 780 -31.8 Ust-Luga 6,700 533 7,600 611 -78.3 7,970 634 -101.0 Total 16,100 1,281 17,200 1,384 -102.6 17,770 1,414 -132.9 Black Sea Novorossiysk 6,100 485 8,000 644 -158.2 7,100 565 -79.6 Sea Of Okhotsk Kozmino 8,500 676 8,800 708 -31.6 8,600 684 -8.0 Total Seaborne Exports 30,700 2,443 34,000 2,735 -292.3 33,470 2,663 -220.4 Druzhba Pipeline Germany 6,220 495 5,220 420 75.0 5,900 469 25.5 Poland 3,700 294 3,750 302 -7.3 3,660 291 3.2 Czech Republic 1,080 86 870 70 15.9 1,300 103 -17.5 Slovakia 1,450 115 1,350 109 6.8 1,350 107 8.0 Hungary 1,350 107 825 66 41.1 1,000 80 27.8 Total Druzhba 13,800 1,098 12,015 966 131.5 13,210 1,051 46.9 China (via Kazakhstan) 2,566 204 2,523 203 1.2 2,471 197 7.6 China (Skovorodino) 7,384 588 7,559 608 -20.5 7,657 609 -21.7 Kazakhstan (Pavlodar) 250 20 0 0 19.9 0 0 19.9 Total Pipeline Exports