February 17, 2023

WWW.ENERGYINTEL.COM

Russian Exports: January Spike Gives Way to February Jitters

  • February shipping data point to a decline in products exports, as well as stranded cargoes, possibly explaining Moscow’s decision to cut crude production.
  • Russia’s exports of crude oil and petroleum products reached 7.9 million b/d in January, the highest level since April.
  • Crude exports in January amounted to 4.85 million b/d, slightly higher than the average for 2022.
  • Last month’s exports of products, including by rail, exceeded 3 million b/d for the first time since the start of the war in Ukraine.

“Eleventh hour” purchases of Russian fuel led to a steep climb in January exports — just ahead of the European Union’s embargo on product imports that went into effect on Feb. 5. Seaborne exports of crude soared by 27% to 3.66 million barrels per day, the highest since April when Russia saw a postwar surge in crude-buying. Shipments out of the Baltic Sea surged 60% on a monthly basis to 1.65 million b/d.

More crude flowed toward Asia, cementing the trend started last year, while products sailed to North Africa, the Middle East, Latin America and quarters unknown as more cargoes lack a destination after departing Russia’s ports.

Energy Intelligence believes that, after Moscow’s decision to cut output by 500,000 b/d in March, and potentially beyond, Russia’s oil exports will remain at current levels and the decline will be reflected in lower refining throughput and products exports.

Created with Highcharts 9.0.0('000 b/d)('000 b/d)RUSSIAN EXPORTS RALLY IN EARLY 2023Total Crude ExportsProduct Exports (RHS)Oct'21Nov'21Dec'21Jan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'22Dec'22Jan'232,0002,5003,0003,5004,0004,5005,0005,5001,0001,5002,0002,5003,0003,500Source: Energy IntelligenceOct'21 Product Exports (RHS): 2,788

Europe’s Last Hurrah

In January, the EU only took 200,000 b/d of seaborne crude oil deliveries — all of which went to Bulgaria, which has an exemption from the embargo.

Via pipeline, known as Druzhba, a group of East European countries imported 400,000 b/d, half recent volumes going through the system and a low not seen since the Urals-contamination debacle in 2019. Germany no longer offtakes Russian crude via the 1 million b/d Druzhba, while Poland’s Orlen, for now at least, has opted to fulfill its contractual obligation with Tatneft, which expires late 2024.

Looking ahead, EU imports of Russian crude should hover in the 500,000 b/d range, although these volumes will diminish in 2024 once the Bulgarian exemption and Tatneft contract expire. In 2021, the EU imported an average 2.4 million b/d of Russian crude.

Created with Highcharts 9.0.0('000 b/d)EU IMPORTS OF RUSSIAN FUELS AT HISTORIC LOWTotalProductsCrudeYear 2021Jun'22Jul'22Aug'22Sep'22Oct'22Nov'22Dec'22Jan'2305001000150020002500300035004000Source: Energy Intelligence, Kpler

Eastern Import Frenzy

Turkey and Asia ramped up seaborne imports to record levels last month, shipping data show.

Turkey imported 500,000 b/d, doubling the average offtake in 2022, while India accounted for 1.5 million b/d — a record high and some 150% more than the average 625,000 b/d it imported during 2022. In 2021, India imported around 50,000 b/d of Russian crude.

China, for its part, ramped up seaborne imports to 1.35 million b/d, including 1 million b/d out of the Far East. The world’s largest importer has even begun to buy some cargoes from Russia’s Arctic ports, according to shipping data.

Including deliveries through the East Siberia-Pacific Ocean pipeline, China imported 2.14 million b/d from Russia in January.

Created with Highcharts 9.0.0('000 b/d)RUSSIA'S MASSIVE SHIFT IN SEABORNE OIL DELIVERIESIndiaChinaTurkeyJan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'22Dec'22Jan'2302004006008001000120014001600Source: Kpler

Product Deliveries Soar

For full-year 2022, products exports amounted to 2.75 million b/d, according to Energy Intelligence data based on Russia’s rail and pipeline shipments. This is down 100,000 b/d from 2021.

In January, these exports are believed to have undergone a boom just ahead of the Feb. 5 embargo by the EU, reaching perhaps even 3.1 million b/d. Seaborne exports are assessed at 2.8 million b/d, according to shipping data, while rail and pipe shipments — ranging from gasoline to North Korea to transshipments of various products to Estonia and Latvia — are estimated at 250,000-300,000 b/d.

Estonia and Latvia are scheduled to export an average 32,000 b/d of products, the most since August 2021, as traders like Vitol offload Russian diesel and gasoline they had amassed ahead of the EU ban. Some 1.25 million barrels of gasoline is slated to be shipped from Latvia to Nigeria this month, Kpler data show.

Created with Highcharts 9.0.0('000 b/d)RUSSIA'S GASOLINE SUPPLIESExportsDomestic deliveriesJan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'22Dec'2202004006008001,0001,200Source: Energy Intelligence

In total, EU countries imported 840,000 b/d of products last month, down from 1.08 million b/d in December, while Turkey took 350,000 b/d, flat month on month, according to shipping numbers.

The burning question now is, after the ban, where will the 840,000 b/d wind up? Other than a vacuum gasoil exemption for Croatia, EU nations can no longer import Russian products.

It is crucial to note that products troubles have arisen at home given infrastructure constraints. In the Far East, Russia's best outlet to the Asian market, many deliveries have encountered delays due to bottlenecks on Russia's rails, the daily Kommersant recently reported.

Diesel Quandary

Both shipping data and official data seen by Energy Intelligence indicate that Russia’s refineries are struggling to find buyers.

Seaborne shipments of petroleum products from Feb. 6 to Feb. 16 averaged about 2.1 million b/d, down 750,000 b/d on January. In a move to increase exports, Russia has lined up sales to Iran, Uzbekistan, Pakistan and North Korea — all by railroad — but these are small and cannot offset the shortfall in seaborne deliveries. Also, many vessels are sailing, or scheduled to sail, without a destination, which points to difficulties.

One attempt to deliver diesel to Spain was headed off by authorities once they learned that the barrels originated on a Cameroon-flagged ship that prior to last July had been sailed under a Russian flag — a violation of EU regulations, a Spanish ministry said in a statement on Feb. 10.

In the 11 days since the embargo went into effect, seaborne exports of diesel and gasoil were 800,000 b/d, down 200,000 b/d from average levels in 2022. Turkey is currently the biggest offtaker in this segment, importing 265,000 b/d of diesel and gasoil during Feb. 1-16, up from 50,000 b/d in February 2022. Other importers include Senegal, Algeria and Brazil, which is scheduled to take 280,000 bbl of diesel from Russia’s Gazprom, according to Kpler.

For more coverage of the Ukraine crisis, visit Ukraine Crisis: Energy Impact >


Created with Highcharts 9.0.0('000 b/d)RUSSIA'S DIESEL SUPPLIESDomestic deliveriesExportsJan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'22Dec'22Jan'2302004006008001,0001,2001,4001,6001,8002,000Source: Energy Intelligence

Created with Highcharts 9.0.0('000 b/d)RUSSIA'S FUEL OIL SUPPLIESExportsDomestic deliveriesJan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'220100200300400500600700800900Source: Energy Intelligence

Created with Highcharts 9.0.0('000 b/d)RUSSIA'S NAPHTHA SUPPLIESExportsDomestic suppliesJan'22Feb'22Mar'22Apr'22May'22Jun'22Jul'22Aug'22Sep'22Oct'22Nov'220100200300400500600700800Source: Energy IntelligenceJun'22 Domestic supplies: 69

Gary Peach, New York