Opening Countdown: Days

Position: > 2016 > Home > News > Industry News >

News content
  • News content

Russian crude exports fall to six-year low as Putin emphasizes refining

Pubdate:2014-07-25 09:36 Source:hydrocarbonprocessing.com Click:

Russia’s crude exports on tankers are poised to fall to the lowest in at least six years as a government push to improve and expand domestic refineries means more oil is exported as fuels like diesel.

Seaborne crude shipments from the world’s biggest energy exporter via the state-run pipeline system in August will fall 9.2% from this month to 2.215 million bpd, according to loading programs obtained by Bloomberg News. That’s the lowest since Bloomberg began tracking the data in 2008.

Russia’s two biggest crude terminals, Primorsk and Novorossiysk, will both export the least on record.

Russian oil companies are refining more crude domestically after President Vladimir Putin pushed them to spend billions of dollars modernizing plants. Output of diesel and fuel oil are the highest since at least 2009, Energy Ministry data show.

This puts pressure on European refiners who are already receiving less Russian crude as flows are diverted to China, which has been less critical of the Kremlin’s role in Ukraine, according to KBC Energy Economics.

“This trend of falling crude exports means we’re finally seeing results from the refinery modernization push,” said Alexander Nazarov, an oil analyst at OAO Gazprombank in Moscow. “Refining is picking up and crude output has peaked.”

Russia produced 10.55 million bbl of crude in June, up 0.1% from a month earlier in the first increase since January, according to the Energy Ministry’s CDU-TEK unit. The country’s refineries operated at the highest rate in two years on June 26, with offline daily processing capacity falling to 26,000 metric tons, before rising to 48,500 tons on July 23, according to CDU-TEK.

European Dependence

“Less crude and more products out of Russia will create problems for the European refining sector,” said Ehsan Ul-Haq, senior market consultant at KBC Energy Economics in Walton-on-Thames, England.

European refiners have struggled to turn a profit as the recession curbed demand for fuel, more efficient plants opened in Asia and the Middle East, and the boom in US oil production closed a major export market. The biggest wave of closures since the 1980s has left the region more dependent on foreign imports of fuel.

Developed economies in Europe got 44% of their net oil imports last year from Russia, according to the Paris-based International Energy Agency.

Leaders in Europe are considering proposals for new sanctions against Russia as officials begin downloading data from the voice recorders of the Malaysian Air jet that was downed last week in Ukraine, killing 298 people. Since the annexation of the Ukrainian region of Crimea in March, Europe and the US have held back from imposing restrictions on Russia’s exports of oil and gas, which provide half the country’s budget.