Page 15 - FSUOGM Week 15 2022

FSUOGM PROJECTS & COMPANIES FSUOGM

Oil traders said to brace for EU’s Russian

May 15 sanction deadline

RUSSIA MAJOR global commodity trading houses are the rather insignificant US oil imports embargo.
planning to reduce crude oil and oil products This week one of the world’s largest inde-
Russia is expected to from Russia's state-controlled oil companies as pendent oil traders, Geneva-based Vitol Group,
cash in as much as early as May 15 to comply with the deadline of said it intends to completely stop trading Russian
$320bn of oil and gas the European Union sanctions on Russia, Reu- crude oil and oil products by the end of this year.
exports this year. ters reported citing unnamed sources. Another major trader, Trafigura, told Reuters
While the EU did not follow the US in impos- it "will comply in full with all applicable sanc-
ing an oil imports embargo on Russia, the word- tions. We anticipate our traded volumes will
ing of the EU sanctions exempts oil purchases be further reduced from 15 May." Gunvor and
from state-controlled Rosneft or Gazpromneft Glencore declined to comment.
only if "strictly necessary". Reportedly, the trad- Rosneft and Gazpromneft European supply
ers are playing it safe and are planning to signif- volumes accounted for 29mn barrels, or almost
icantly cut purchases from Rosneft to comply 1mn barrels per day (bpd) in April 2022, which
with the ambiguous sanctions language, sources is over 40% of overall Urals crude oil exports
told Reuters. from Russia's western ports in April, according
As followed by bne IntelliNews, exports of to Reuters.
Russian oil and gas are the next big target in pos- "All companies are sitting down with their
sible sanctions for Russian military invasion of lawyers to figure out what they can and cannot
Ukraine. The country is expected to cash in as do," a senior unnamed trading source told Reu-
much as $320bn of oil and gas exports this year, ters. "It's unclear what this means for the whole
but latest budget reports show that the govern- supply chain, for shippers, insurers," adding that
ment is already falling behind on hydrocarbon his firm was looking at implications for non-
revenues. state-owned oil sales.
In the meantime, some oil traders are doing "Lawyers are having a feast on this. Where
everything they can to avoid doing business there is uncertainty, companies will step back.
with Russia, even though Russian oil exports Russian oil flows will be greatly reduced going
have largely not been sanctioned yet, apart from forward," the source added.™

Shell warns of $4-5bn

Russian hit

RUSSIA SHELL warned on April 7 it expected to book The newspaper reported on April 9 that the
a write-down charge of between $4 and $5bn in oil mix was being referred to as “Latvian blend.”
The UK major the first quarter on its Russian assets in light of Shell gave the warning in a trading update,
previously said it would its decision to leave the country because of Mos- in which it also estimated its first-quarter
write off only $3.4bn cow’s war in Ukraine. production at between 860,000 and 910,000
of value. The UK major previously said it would write barrels of oil equivalent per day for its inte-
off only $3.4bn in value because of its departure grated gas segment, versus 927,000 boepd in
from Russia, where it has a 27.5% stake in the the previous three-month period. It attrib-
Gazprom-operated Sakhalin LNG plant in the uted the decline to maintenance activities,
Russian Far East, as well as shares in Gazprom including a scheduled turnaround at Pearl
Neft’s Salym Petroleum and Gydan oil develop- GTL in Qatar.
ments in Western Siberia. The company’s overall The company also said it believes it produced
market capitalisation is roughly $205bn. between 7.7mn and 8.3mn tonnes of LNG dur-
Shell is also scaling back its oil and gas trad- ing the first quarter, compared with 7.94mn
ing activities in Russia, after getting in hot water tonnes in the fourth quarter. Its upstream output
for buying a heavily discounted cargo of Russian ranged between 1.9 and 2.05mn boepd, down
Urals oil in early March. According to Bloomb- from 2.16mn boepd previously, in part because
erg, however, the company is continuing Russian it transferred 50,000 boepd of production at its
oil trade but is blending it with crude of another Canada Shales assets to its integrated gas busi-
origin to avoid scrutiny. ness. ™

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