Page 7 - FSUOGM Week 24 2022

FSUOGM COMMENTARY FSUOGM

CREA believes that
targeting oil shipping is
key to putting pressure
on Russian exports.

discounts to its crude oil exports, as well as a 18% of the country’s crude exports. The largest
cut in gas supply volumes, following Gazprom’s buyer was the Jamnagar refinery, which got 27%
decision to cut off supply to nine buyers in Bul- of its oil from Russia in May, up from less than
garia, Denmark, Finland, Germany, the Nether- 5% before April. Russian imports have mainly
lands and Poland. Those countries had refused replaced arrivals from other sources in India,
to comply with a Kremlin decree that required but the country has also seen an uptick in overall
them to make their euro and US dollar-denomi- crude intake since the start of April, according
nated payments to accounts set up at Gazprom- to the report.
bank, to be converted into rubles before transfer Most of this oil is re-exported in petroleum
to Gazprom. product form. This amounts to half of the petro-
Nevertheless, Russian hydrocarbon export leum products that the Jamnagar refinery pro-
revenues rose by nearly 40% y/y in May to duces in total.
€883mn in May. This was €43mn more than CREA stressed it was important to target the
Russia is estimated to be spending on its war in shipping of Russian oil to prevent the country
Ukraine. simply diverting its oil to other markets.
The reduction in volumes shaved €95mn “As Russian oil is increasingly shipped to
off Russia’s daily receipts, and the discount on more distant markets, more tanker capacity than
Russian oil wiped off a further €95mn. But these ever before is needed,” CREA said. “This is a key
factors were more than offset by the €443mn vulnerability – strong sanctions against tankers
growth in receipts that resulted from higher transporting Russian crude would significantly
hydrocarbon prices. Revenues were down from limit the scope for this kind of rerouting of Rus-
an average of €1.1bn per day in January and Feb- sia’s exports.”
ruary, although seasonality was a major cause of In April-May, CREA estimated that 68% of
this decline. the oil that Russia exported was on board ships
On a country-by-country basis, the largest owned by EU, UK and Norwegian companies.
dents to Russia’s revenue stream were made Greek tankers alone carried 43% of the total.
by Poland and the US. Percentage-wise, sharp 97% of the tankers were insured in just three
reductions were also achieved by Lithuania, countries – the UK, Norway and Sweden.
Finland and Estonia. In its policy recommendations, CREA called
for the sanctioning of all involvement in the
Other buyers step up transporting of Russian hydrocarbons to third
China notably replaced Germany as the biggest parties, and the introduction of tariffs on Rus-
buyer of Russian hydrocarbons during the 100- sian oil imports when they cannot be phased out
day period, importing a total of €12.6bn. While immediately.
Chinese purchases have remained at a relatively “Sufficiently high tariffs would encourage
constant level during the war, Germany was able buyers not to purchase from Russia whenever
to make a 25% reduction in its crude imports possible, and curb the price paid to Russian sup-
from Russia. pliers on spot markets,” CREA said.
China, India, France, the UAE and Saudi CREA also called for a plan to replace Russian
Arabia also took advantage of the discount on fossil fuels with cleaner energy sources, and extra
Russian oil and expanded purchases. India measurements regarding energy efficiency and
emerged as a significant buyer, accounting for energy savings to be implemented. ™

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