Page 5 - AsianOil Week 16 2022

AsianOil COMMENTARY AsianOil

Certain Chinese refiners
are reported to have
been warned about the
risks of buying more
Russian crude at this
time.

Indian media reported that at least two domes- plans from overseas governments.
tic refiners were intending to buy less Saudi oil If this is playing out in the LNG market, with
than usual in May as a result of this. Russian oil some of the same companies involved, it cannot
is thought to be the alternative that Indian refin- be ruled out that something similar could be
ers will turn to. happening in the oil market as well.
“We have started buying. We have received ... Nonetheless, there is clear pressure on Chi-
quite a number of barrels, I would think about nese buyers to treat Russian oil with caution.
3-4 days’ supply, and this will continue,” Indian Sinopec’s trading arm, Unipec – a major buyer
Minister of Finance Nirmala Sitharaman said of Russian crude – is reported to have warned its
earlier this month at an event organised by a global teams against the risks of dealing with oil
local broadcaster. “I would put my country’s from Russia in recent weeks.
national interest first,” Sitharaman continued. “The message and tone are clear – risk
“First of all, fuel is available, and available at a control and compliance comes before prof-
discount. Why shouldn’t I buy it?” its,” one source who had been briefed on the
meetings told Reuters. “Although Russian oil
Cautious approach is hugely discounted, there are many issues
Chinese refiners, meanwhile, are proceeding like securing shipping insurance and pay-
cautiously. Earlier this month it was reported ment snags.”
that state-owned energy giants Sinopec, Pet- According to another of the sources, a refin- India has cited
roChina, China National Offshore Oil Corp. ery that regularly processes Russian crude was
(CNOOC) and Sinochem were honouring exist- told by Unipec to find an alternative source of national interest
ing Russian oil contracts but avoiding new ones supply to maintain its regular operations. in continuing to
despite the discounts on offer. Sources familiar The pressure not to be seen buying Russian
with the matter were cited by Reuters as saying oil is also affecting China’s independent refiner- buy Russian oil,
the companies did not want to be seen as openly ies, known as teapots, which typically consume
supporting Moscow. around one-third of the country’s crude imports with Moscow
“SOEs [state-owned enterprises] are cautious, from Russia. They have not stopped dealing
as their actions could be seen as representing the with Russia, however. Instead, they are reported reportedly
Chinese government and none of them wants to to be taking steps such as deploying alternative encouraging the
be singled out as a buyer of Russian oil,” said one payment mechanisms including cash transfer,
of the sources. paying after cargo is delivered and using Chi- purchases.
However, a separate Bloomberg report that nese currency.
emerged around the same time said state- As of late March, exports of Russia’s ESPO
owned companies including Sinopec and crude blend from the port of Kozmino were
PetroChina were in discussions to buy spot scheduled to reach 3.3mn tonnes (24mn barrels)
cargoes of LNG. People with knowledge of the in May – a monthly record high. Interest in buy-
matter told the news service that some import- ing Russian crude, it seems, is not going away,
ers were even considering using Russian firms particularly in Asia, and remains an especially
to participate in LNG purchase tenders on their attractive option for those buyers that are able to
behalf in an effort to hide their procurement avoid public scrutiny of their purchases.™

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