Page 10 - FSUOGM Week 31 2022

FSUOGM POLICY FSUOGM

Russia seeks new routes for crude exports

RUSSIA RUSSIA is seeking new ways of getting its oil Spanish north African city of Ceuta, and in the
exports to market, including by using a minor mid-Atlantic. Another such transfer appeared to
Russia is testing Egyptian port to shift Urals crude to interna- take place off Johor, near Singapore, in June – a
different options tional markets, Bloomberg reported on August site already used by Iran to transship deliveries
ahead of the EU ban 3. to China.
on seaborne Russian According to the news agency, a cargo of Bloomberg previously reported that Russian
shipments. around 700,000 barrels of Russian oil was seaborne oil exports had stabilised in the week
shipped to Egypt’s El Hamra oil terminal on the ending July 29 at 3.5mn barrels per day, albeit
Mediterranean shore early on July 24, and within 500,000 bpd below the peak level reached prior
a few hours, another vessel loaded up at the port, to Moscow’s February invasion of Ukraine.
although it is unclear whether that consignment Russian oil and petroleum product output also
was the same oil. This makes the ultimate desti- recovered further last month as a whole, with
nation of the cargo harder to track. crude production up 2% month on month to
European buyers are already shunning Rus- 10.7mn bpd, and refining through rising 4% to
sian crude voluntarily, causing Urals to slump to 5.66mn bpd.
a steep discount of up to $30 per barrel versus The recovery in volumes has frustrated West-
Brent over recent months. But the EU will not ern efforts to deprive Moscow of revenues to
impose a ban on seaborne oil shipments from finance its war in Ukraine. And a US and EU
Moscow until later this year, while also prohib- proposal to introduce a price cap on Russian oil
iting the provision of insurance and other insur- globally – threatening buyers not aligned with
ance services for those cargoes. the West’s position on Russia with sanctions if
Nevertheless, the operation in Egypt could they do not abide by it – has made limited pro-
signal that Russia is testing different ways of gress. Major Asian buyers like India and China
covertly shipping its oil to markets. Bloomberg have not been receptive to the idea, and Beijing is
notes that previously, tankers carrying Russian highly unlikely to sign up now following renewed
oil undertook ship-to-ship cargo transfers off the tensions with Washington over Taiwan. ™

Russia raises stakes in Sakhalin

showdown

RUSSIA RUSSIA has raised the stakes in a standoff with Japan’s Mitsui and Mitsubishi, with shares of
Western investors at major oil and gas projects in 12.5% and 10% respectively, have not signalled
ExxonMobil is accused the Far East, blaming Sakhalin-1 operator Exx- they will exit just yet. The government in Tokyo,
of practically ceasing onMobil for a collapse in production, and giving conscious that Japan is the main buyer of gas
production, and the Shell and other investors at the Sakhalin-2 pro- from Sakhalin-2, is fearful that it would lose this
Sakhalin-2 investors ject a month to decide whether they want to keep supply if it cedes ownership of the project.
have a month to decide onto their stakes. However, Mitsui and Mitsubishi have shaved
whether to take shares Oil output at Sakhalin-1 has virtually $1.7bn off the value of their shares in Sakhalin-2,
in the new operating ceased, ExxonMobil’s Russian state partner in they announced this week.
company. the project Rosneft said on August 4, raising Another element is the fact that the current
the prospect that Russia could seize the fields operator of Sakhalin-2, the Sakhalin Energy
in order to bring operations back on track. company majority-owned by Gazprom, has
The Sakhalin-2 LNG project was already reportedly asked LNG customers to pay for
seized by Russian authorities in late June, and supplies in different currencies – potentially the
in a decree issued this week, the Russian gov- Chinese yuan, the Japanese yen and the South
ernment announced that foreign sharehold- Korean won. Reuters reported on July 29 that
ers would have a month to decide whether Sakhalin Energy also wanted to pay for gas via a
they want to take shares in the newly-formed Moscow unit of a European bank.
entity to operate the site. According to Reuters, some buyers are
It is unclear whether the foreign investors will already paying into the designated bank,
do this. Shell, which holds a 27.5% stake in the although these payments are still made in US
project, has stated its intention to withdraw from dollars. In a similar move, the Kremlin ordered
Russia, but it has not said how quickly it aims European buyers of piped gas earlier this year to
to achieve this, and how. The other investors, settle their bills in rubles. ™

P10 www. NEWSBASE .com Week 31 05•August•2022