Page 56 - RusRPTFeb23

According to Eurostat, the decline in the physical volume of supplies of oil and petroleum products from Russia to the EU accelerated to 30% y/y in October (3Q22: -23% y/y). Its volume fell to 2.3 mbpd in October, i.e. by 1.0 mbpd y/y, including 0.7 mbpd y/y due to oil.
“The worsening dynamics in the fourth quarter is due to the EU embargo. The ban on oil imports to the EU from Russia was introduced as early as the sixth round of sanctions in June. At the same time, until December 5, it did not apply to oil supplies under contracts concluded before June 4 and under one-time transactions with a short-term supply,” the CBR said. “After December 5, 2022, embargo exemptions are provided for a much smaller volume of shipments. As a result, in December, offshore oil supplies from Russia to Northern Europe ceased, and to Southern Europe fell to 0.2 mbpd. At the end of the year, such deliveries remained mainly to Bulgaria, which received relief from the embargo.”
Russia's oil exports were also affected by the ceiling on Russian oil prices effective December 5. The G7 countries, the EU and Australia introduced it at $60 per barrel.
Companies from the participating states of this initiative are prohibited from providing services for the transportation of Russian oil by sea to third countries, as well as services for its insurance, brokerage services, technical assistance, and financing of operations.
At the same time, the restrictions do not apply if oil is bought at a price not higher than the established ceiling. These restrictions in December slowed down the reorientation of supplies from Russia to Asian countries. At the same time, the effect of the EU restrictions in December could have been overestimated, as one-time short-term factors were also in play.
Gas
In 4Q22 the decline in physical volume of Russian gas exports to non-CIS countries intensified, rising to 64% y/y compared to a 3Q22 fall of 61% y/y.
The absence of gas supplies to the EU through the Nord Stream 1 pipeline, which ceased at the end of August, was fully manifested in the results. At the same time, in 4Q22, gas was still exported to Europe through Ukraine and via the Turkish Stream pipeline so there was some revenues coming in from gas exports to Europe.
The reduction in supplies to the EU was partly compensated for the increase in exports to China via the Power of Siberia gas pipeline in excess of contractual obligations. In December, the Kovykta-Chayanda section of the Power of Siberia gas pipeline was put into operation increasing Chinese deliveries. This pipeline is connected the Kovykta field, the largest in terms of gas reserves in Eastern Russia, and potentially can increase gas exports to China further in 2023.
“At the same time, in the conditions of a mild winter and high stocks in the EU, the price of gas in Europe, an important market for Russia, decreased from
56 RUSSIA Country Report February 2023 www.intellinews.com