Page 99 - RusRPTNov22

Omisalj when the upcoming EU embargo maritime imports of Russian oil goes into effect. The construction time of the 130km-long line is estimated at less than a year, including surveying and project design.
Gazprom Neft most obvious beneficiary among Russian oil companies. Gazprom Neft controls NIS, which in turn controls Serbia’s two oil refineries with a total capacity of 140kbd.
The capacity of the proposed line was not mentioned in the story, but we assume it will be sufficient to fully supply those two refineries. This is therefore modestly good news for Gazprom Neft, as it potentially secures a significant amount of European exports for the company despite the embargo within perhaps 12 months of the start of the embargo.
After allowing for less than 100% capacity utilization – in recent years NIS has run at only c50% of capacity – this is roughly equivalent to c20% of Gazprom Neft’s typical exports to non-CIS countries.
Russia has lost three-fifths of its seaborne crude sales in Europe since Moscow sent troops into Ukraine in February. That market is going to vanish almost completely eight weeks from now and the latest sanctions will make it very difficult to divert flows elsewhere.
Crude shipments to Europe averaged 630,000 barrels a day in the four weeks to Oct. 7, down from 1.62mn before the invasion. Tankers carrying Russia’s oil are now forced to spend four times as long making each delivery to India as they would previously have done shipping a cargo to the Netherlands, or 10 times as long as it would have taken to get to Gdansk in Poland.
Russia has said it won’t sell its oil to anyone who imposes a price cap, warning that its introduction could lead the country to cut production, and its major customers remain unlikely to endorse the plan. Still, the existence of such a mechanism is expected to boost the bargaining power that key customers China, India and Turkey have over Russia for future purchases.
Flows to those three countries, which initially stepped in to fill the gap after European buyers started to shun Moscow’s exports, peaked in June at 2.2mn barrels a day. In the four weeks to Oct. 7 that figure was down by about 320,000 barrels a day.
US refiners are enjoying the best-ever diesel margins, with the profit of turning a barrel of crude into one of diesel hitting a record high of $86.5 per barrel, up roughly 450% from the 2000-2020 average of $15.7 per barrel.
99 RUSSIA Country Report November 2022 www.intellinews.com