Page 10 - FSUOGM Week 24 2022

FSUOGM POLICY FSUOGM

Gneiss: The wider implications

of a ban on Russian oil

EUROPE THIS week, Doug Rycroft, director at corporate has been trading at a ca. $35 per barrel discount
finance advisory firm Gneiss Energy, spoke to to other similar medium sour blends. Currently
Doug Rycroft is a NewsBase about the implications of banning those alternatives are trading at parity with most
director at Gneiss Russian oil. global benchmarks, e.g. Arab light is trading at
Energy, a strategic "As the conflict continues to rage in Ukraine, ca.$113 per bbl.
and corporate finance the EU has announced a further package of sanc- "But that is not the only potential issue. Many
advisory firm operating tions on Russian interests. The focus of the latest refineries in Europe are configured for Urals
within the energy round of sanctions is a ban on oil imports from blend – API gravity of 30.6 and a sulphur per-
and natural resources Russia. The ban will immediately impact 75% of centage of 1.48. So replacing this with oil sourced
sectors. Russian oil imports to Europe and, by the end of from elsewhere could potentially lead to expen-
2022, up to 90% of imported oil will be banned. sive reconfiguration of refinery infrastructure.
Source: Gneiss.energy. "In the grand scheme of things, the argument "This combination of a global rebalancing
com that buying Russian hydrocarbons is fuelling of oil flows, increased commodity prices and
the Kremlin’s war machine seems quite a simple expensive reconfiguration activity will undoubt-
one to make and therefore banning that activity edly lead to higher pricing for oil products,
seems an obvious step. But what could be the impacting all sectors. We are already seeing the
wider consequences of this? effects of this in the US where refined product
"Put simply, large parts of Europe are now exports are soaring.
in the market for a new oil supplier. And in a "So whilst the EU has made the obvious and
seller’s market, there is a strong possibility of a correct moral decision, further consideration
surge in demand leading to further price infla- will be needed to mitigate the impacts on busi-
tion on top of current soaring prices. Mean- nesses and consumers, and, of course, the further
while, another consequence is that Urals blend burden this will place on our cost of living."™

P10 www. NEWSBASE .com Week 24 15•June•2022