(Bloomberg) — Russia’s crude shipments slid to the lowest for 2022 in the final four weeks of the year as sanctions crimped Moscow’s exports. Cargoes bound for China, India and Turkey, which have become a lifeline for Russian supplies displaced from Europe, saw a third straight drop.The country’s overall seaborne flows fell by 117,000 barrels a day to 2.615 million barrels on a four-week average basis. Volumes also declined week-on-week, though they recovered from a mid-month, weather-related slump.Inflows to the Kremlin’s war-chest sagged amid a combination of G-7 and European Union sanctions designed to punish President Vladimir Putin for last February’s invasion of Ukraine.
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Storms did appear to play a significant role in disrupting flows from Black Sea and Pacific ports last month, with loadings at Kozmino halted by bad weather for more than 11 days in December, according to pipeline operator Transneft PJSC. But a shortage of vessels to haul cargoes over the much longer distances required following an EU ban on seaborne crude imports from Russia may also be having an impact.
The EU ban that came into force on Dec. 5 has closed off Moscow’s closest oil market, which took roughly half Russia’s seaborne exports at the start of the year. With the exception of a small volume delivered to Bulgaria, seaborne flows of Russian crude to the bloc halted in full, as planned.
The ban has led to much longer voyages for shipments, with journeys now taking an average of 31 days from Baltic ports to India, compared with just seven days from the same terminals to Rotterdam. That’s putting more pressure on the dwindling fleet of ships whose owners are willing to haul Russian cargoes.
The country is increasingly reliant on its own ships and a so-called “shadow fleet” of usually older ships owned by small, often unknown companies that have sprung up in recent months. European-owned tankers can still carry Russian crude, as long as it was sold at a price below a $60 a barrel cap, introduced at the same time as the import ban. But few are now doing so.
Elsewhere, shuttle tankers that haul Russia’s Sokol crude are waiting much longer than usual to transfer cargoes to other ships off the South Korean port of Yeosu, reducing the number of cargoes they are able to lift each month.
Meanwhile, the volume of crude on vessels heading to China, India and Turkey, the three countries that have emerged as the only significant buyers of displaced Russian supplies, plus the quantities on ships that are yet to show a final destination, fell in the four weeks to Dec. 30 to average 2.42 million barrels a day.
Tankers hauling Russian crude are becoming more cagey about their final destinations. Vessels carrying 19 million barrels of Russian crude, the equivalent of 680,000 barrels a day of exports, left port showing no clear final destination in the four weeks to Dec. 30. It remains likely that many leaving Baltic and Black Sea terminals will begin to signal Indian ports once they pass through the Suez Canal, while shipments to the United Arab Emirates are becoming more common.
There has been a resurgence in ship-to-ship transfers of Russian crude, both off the Spanish north African city of Ceuta and off the Greek coast near Kalamata. The VLCC Lauren II has taken one 100,000-ton cargo at Ceuta and is likely to take two more before heading around Africa to Asia, freeing up the smaller vessels capable of loading at Russia’s Baltic terminals to shuttle cargoes over shorter distances.
Crude Flows by Destination:
On a four-week average basis, overall seaborne exports fell by 117,000 barrels a day. At 2.615 million barrels a day, four-week average flows were the lowest for the year. Shipments to Europe have dried up almost completely, while those to Asia also slipped.
All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. These are shipments made by KazTransoil JSC that transit Russia for export through Ust-Luga and Novorossiysk.
The Kazakh barrels are blended with crude of Russian origin to create a uniform export grade. Since the invasion of Ukraine by Russia, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies. Transit crude is specifically exempted from the EU sanctions.
Europe
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Russia’s seaborne crude exports to European countries fell to 167,000 barrels a day in the 28 days to Dec. 30, with Bulgaria the sole European destination. These figures do not include shipments to Turkey.
A market that consumed more than 1.5 million barrels a day of short-haul crude, coming from export terminals in the Baltic, Black Sea and Arctic has been lost almost completely, to be replaced by long-haul destinations in Asia that are much more costly and time-consuming to serve.
No Russian crude was shipped to northern European countries in the four weeks to Dec. 30.
Exports to Mediterranean countries continued to fall, slipping to 57,000 barrels a day on average in the four weeks to Dec. 30 and setting another low for the year. Flows to the region fell for a eighth week.
Turkey was the only destination for Russian seaborne crude into the Mediterranean, but flows there also fell, dropping to the lowest since Russia’s invasion of Ukraine on a four-week average basis. Shipments to the country in the four weeks to Dec. 30 were one-sixth the levels seen at the start of November, though some of the ships that are yet to show destinations could end up in Turkey.
Flows to Bulgaria, now Russia’s only Black Sea market for crude, slipped back from a 10-week high to 167,000 barrels a day. Bulgaria secured a partial exemption from the EU ban, which should support inflows now that the embargo has come into force.
Asia
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Four-week average shipments to Russia’s Asian customers, plus those on vessels showing no final destination, which typically end up in either India or China, edged lower in the week to Dec. 30. While the volume heading to India appears to have slumped, history shows that most of the cargoes on ships initially showing no final destination end up there.
The equivalent of more than 400,000 barrels a day was on vessels showing destinations as either Port Said or Suez, or which have already been or are expected to be transferred from one ship to another off the South Korean port of Yeosu. Those voyages typically end at ports in India and show up in the chart below as “Unknown Asia.”
The “Unknown” volumes, running at 284,000 barrels a day in the four weeks to Dec. 30, are those on tankers showing a destination of Gibraltar, Malta or no destination at all. Most of those cargoes go on to transit the Suez Canal, but some could end up in Turkey.
Flows by Export Location
Aggregate flows of Russian crude fell by 269,000 barrels a day, or 9%, in the seven days to Dec. 30. Baltic shipments were down by 25% from the previous week, while those from the Black Sea were up 16%. Volumes loaded from the Arctic terminal at Murmansk also fell, while those from the Pacific were little changed. Figures exclude volumes from Ust-Luga and Novorossiysk identified as Kazakhstan’s KEBCO grade.
Export Revenue
Inflows to the Kremlin’s war chest from its crude-export duty fell by $15 million, or 12%, to $108 million in the seven days to Dec. 30, while the four-week average income fell by $3 million to $110 million. Though weekly export duty revenues have rebounded from the slump seen in the week to Dec. 16, the less volatile four-week average was the lowest for the year.
The December duty rate was $5.91 a barrel, based on an average Urals price of $71.1 a barrel, according to figures from the Russian Ministry of Finance. The duty rate for January is 61% lower at $2.28 a barrel, its lowest since June 2020, when oil prices were hit by the Covid-19 crisis.
However, the drop is due in part to a change in the formula used to calculate duty rates for 2023, with the country moving away from taxing exports and shifting the burden to production as part of its multi-year tax maneuver. The plan sees export duty phased out entirely by the start of 2024.
Origin-to-Location Flows
The following charts show the number of ships leaving each export terminal and the destinations of crude cargoes from the four export regions.
A total of 24 tankers loaded 18.4 million barrels of Russian crude in the week to Dec. 30, vessel-tracking data and port agent reports show. That’s down by 1.9 million barrels, or 9%, from the previous week. Destinations are based on where vessels signal they are heading at the time of writing, and some will almost certainly change as voyages progress. All figures exclude cargoes identified as Kazakhstan’s KEBCO grade.
The total volume on ships loading Russian crude from Baltic terminals fell by 25%, reversing much of the previous week’s gain.
Flows were lower from both Primorsk and Ust-Luga, with three fewer tankers taking on cargoes than during the previous week.
Shipments from Novorossiysk in the Black Sea rose for a second week. Four tankers loaded Russian crude cargoes at the port in the week to Dec. 30.
Arctic shipments slipped in the seven days to Dec. 30 with two vessels leaving from Murmansk during the week. Both ships are heading to Asia via the Suez Canal.
Shipments from the Pacific have rebounded from the slump seen in the week to Dec. 16. Oil loadings from Kozmino were halted for more than 11 days in December due to storms, according to oil-pipeline operator Transneft, which likely accounts for the slump in volumes seen that week.
All of the cargoes heading for unknown destinations are on ships going to Yeosu in South Korea, where it’s likely that they will conduct ship-to-ship transfers outside the port, as previous tankers have done, or on vessels that have already taken cargoes in this way but are yet to show final destinations.
All cargoes of Sokol crude loaded since shipments restarted in October have been moved in this way. Several of the receiving vessel that initially remained anchored off the port are now heading to India, others have moved south to Johor in Malaysia to sit at anchor there. The area is a popular transshipment area for crude cargoes.
Note: This story forms part of a regular weekly series tracking shipments of crude from Russian export terminals and the export duty revenues earned from them by the Russian government.
Note: All figures exclude cargoes owned by Kazakhstan’s KazTransOil JSC, which transit Russia and are shipped from Novorossiysk and Ust-Luga as KEBCO grade crude.
Note: Data on crude flows can also be found at {DSET CRUDE }. The numbers, which are generated by a bot, may differ from those in this story.
Note: Aggregate weekly seaborne flows from Russian ports in the Baltic, Black Sea, Arctic and Pacific can be found on the Bloomberg terminal by typing {ALLX CUR1 }.
–With assistance from Sherry Su.
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Source: https://finance.yahoo.com/news/russias-oil-flows-slump-2022-122725884.html