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

Koreas Mark 61st Anniversary of War Armistice

Muted observances on both sides of heavily-armed Demilitarized Zone that separates two decades-long enemies More

Judge Declares Washington DC Ban on Public Handguns Unconstitutional

Ruling overturns capital city's prohibition on carrying guns in pubic More

Pricey Hepatitis C Drug Draws Criticism

Activists are using the International AIDS Conference to criticize drug companies for charging high prices for life-saving therapies More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Students in Business for Themselvesi
X
Mike O'Sullivan
July 26, 2014 11:04 AM
They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Not Even Monks Spared From Thailand’s Junta-Backed Morality Push

With Thailand’s military government firmly in control after May’s bloodless coup, authorities are carrying out plans they say are aimed at restoring discipline, morality and patriotism to all Thais. The measures include a crackdown on illegal gambling, education reforms to promote students’ moral development, and a new 24-hour phone hotline for citizens to report misbehaving monks. Steve Sandford reports from Bangkok.
Video

Video Virtual Program Teaches Farming Skills

In a fast-changing world beset by unpredictable climate conditions, farmers cannot afford to ignore new technology. Researchers in Australia are developing an online virtual world program to share information about climate change and more sustainable farming techniques for sugar cane growers. As VOA's Zlatica Hoke reports, the idea is to create a wider support network for farmers.
Video

Video Airline Expert: Missile will Show Signature on Debris

The debris field from Malaysia Airlines Flight 17 is spread over a 21-kilometer radius in eastern Ukraine. It is expected to take investigators months to sort through the airplane pieces to learn about the missile that brought down the jetliner and who fired it. VOAs Carolyn Presutti explains how this work will be done.
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
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.

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.