News / Economy

More Russian Oil Flows to China in Shift From Europe

An employee talks on a portable radio set at Bashneft - Novoil refinery in the city of Ufa, Russia, April 11, 2013.
An employee talks on a portable radio set at Bashneft - Novoil refinery in the city of Ufa, Russia, April 11, 2013.
Reuters
— Russia is steeply ramping up oil deliveries to China, with Asia now importing almost a fifth of oil exports from the world's largest crude producer in a strategic shift meant by the Kremlin to end reliance on weak and saturated European markets.
 
Russia will increase oil supplies to China by 13 percent in July-September from the previous three months, a shipping schedule obtained by Reuters showed on Tuesday.
 
Together with supplies to the Pacific port of Kozmino, Russia will export around 750,000 barrels per day to Asia, or 17 percent of its overall exports of 4.4 million bpd.
 
“Russia has been losing its interest in Europe where oil consumption is stagnant. It's looking increasingly to the East,” Valery Nesterov, analyst from Sberbank CIB, said.
 
The speed of changes in export patterns has aroused widespread surprise as it took Russia only five years to re-route huge volumes, previously destined for European markets.
 
Russia first started supplying China by railway and then by a new pipeline while opening a Pacific port, Kozmino, in 2009.
 
The projects cost pipeline monopoly Transneft  dozens of billions of dollars and spurred criticism from some private Russian producers who said they all had to pay higher tariffs to Transneft so it could build the pipelines.
 
Private producers also said they benefited little from the projects as the main volumes supplied to China came from state oil major Rosneft.
 
The Kremlin oil major raised tens of billions of dollars from Beijing by pre-selling its oil under long-term deals in order to finance its growth and acquisition drive.
 
The shift in export route has also led to a gradual strengthening of Russian oil prices for European consumers, who had been used for decades to buying Russia's export blend Urals at a steep discount to benchmark Brent prices.
 
Over the past few years, Urals has repeatedly traded at a premium to Brent, including on Tuesday, as traders said Russian supplies to Europe looked thin, especially to northern countries from Russia's Baltic ports.
 
“That is a tight schedule for the Baltic again... It is  the Baltic which has to compensate for higher deliveries to  China,” a trader with an oil major said.
 
Urals trading at a premium to Brent means refiners have to pay heavily for the previously cheap oil, making life harder for them at a time of small profits, known in the industry jargon as refining margins.
 
“Next year and in 2015 it will get only tighter as supplies to China are set to rise,” the trader with a major said.
 
Rosneft agreed in March to triple supplies to China. It did not specify over what period, but it plans to increase deliveries by 800,000 tons this year on top of the 15 million tons (300,000 barrels per day) it already supplies annually.
 
Traders expect the volumes for China to rise to 17 million in 2014 and by 2015 they could amount to as much as 20 million tons, on par with Germany, the top individual consumer of Russian oil to date.
 
Urals crude exports via the Baltic Sea port of Primorsk are set to fall by 7.4 percent compared with the second quarter to 14.7 million tons, the schedule showed.
 
Urals exports from the Baltic Sea port of Ust-Luga will decline by 6.4 percent to 7 million tons, while shipments from the Black Sea port of Novorossiisk will increase 3.4 percent to 9.95 million tons.

You May Like

Computer Crash Halts US Visa, Passport Operation

Problems with database have resulted in extensive backlog of applications, affected State Department's consular offices all over the world More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

World Bank: Boko Haram Stalls African Aid Projects

Islamist group’s terrorism sets back agriculture, health efforts in Cameroon, Chad and Nigeria More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Israel Targets Gaza Supply Tunnelsi
X
July 24, 2014 4:42 AM
The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video MH17's 'Black Boxes' Could Reveal Crash Details

The government of Malaysia now has custody of the cockpit voice and flight data recorders from Malaysia Airlines Flight 17, which was hit by a missile over Ukraine before crashing last week. As VOA's Carolyn Presutti reports, the so-called black boxes may hold information about the final minutes of the flight.
Video

Video Living in the Shadows Panel Discussion

Following a screening of the new VOA documentary, "AIDS - Living in the Shadows," at the World AIDS conference in Melbourne, a panel discussed the film and how to combat the stigma associated with HIV/AIDS.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video US Awards Medal of Honor for Heroics in Bloodiest of Afghan Battles

U.S. combat troops are withdrawing from Afghanistan, on pace to leave the country by the end of this year. But on Monday, U.S. President Barack Obama took time to honor a soldier whose actions while under fire in Afghanistan earned him the Medal of Honor. VOA's Jeff Seldin has more from the Pentagon.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid

World Currencies

EUR
USD
0.7305
JPY
USD
101.53
GBP
USD
0.5830
CAD
USD
1.0656
INR
USD
60.075

Rates may not be current.