MOSCOW: Russia is steeply ramping up oil deliveries to China, with Asia now importing almost a fifth of oil exports from the world’s largest crude producer in a strategic shift meant by the Kremlin to end reliance on weak and saturated European markets.
Russia will increase oil supplies to China by 13 percent in July-September from the previous three months, a shipping schedule showed yesterday.
Together with supplies to the Pacific port of Kozmino, Russia will export around 750,000 barrels per day to Asia, or 17 percent of its overall exports of 4.4 million b/d.
“Russia has been losing its interest in Europe where oil consumption is stagnant. It’s looking increasingly to the East,” Valery Nesterov, analyst from Sberbank CIB, said.
The speed of changes in export patterns has aroused widespread surprise as it took Russia only five years to re-route huge volumes, previously destined for European markets.
Russia first started supplying China by railway and then by a new pipeline while opening a Pacific port, Kozmino, in 2009.
The projects cost pipeline monopoly Transneft dozens of billions of dollars and spurred criticism from some private Russian producers who said they all had to pay higher tariffs to Transneft so it could build the pipelines.
Private producers also said they benefited little from the projects as the main volumes supplied to China came from state oil major Rosneft.
The Kremlin oil major raised tens of billions of dollars from Beijing by pre-selling its oil under long-term deals in order to finance its growth and acquisition drive.
The shift in export route has also led to a gradual strengthening of Russian oil prices for European consumers, who had been used for decades to buying Russia’s export blend Urals at a steep discount to benchmark Brent prices.
Over the past few years, Urals has repeatedly traded at a premium to Brent, including on Tuesday, as traders said Russian supplies to Europe looked thin, especially to northern countries from Russia’s Baltic ports.
Reuters
