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FlxpuOoWAAEFR0X
 

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Russian budget revenue from oil, gas industry grew 28% in 2022: Official​


Russia's budget revenues from the oil and gas industry grew 28% annually in 2022, a senior official said on Monday.

That increase amounts to 2.5 trillion Russian rubles ($36.5 billion), Alexander Novak said at a meeting between Prime Minister Mikhail Mishustin and other deputy prime ministers.

Novak pointed out that oil production in Russia rose 2% last year to 535 million tons, while oil exports increased 7% despite Western sanctions over the war in Ukraine.

"Summing up, I would like to note once again that last year the fuel and energy complex, despite all the difficulties, demonstrated stable operation, resistance to external challenges, the ability to ensure the energy security of our country and the realization of export potential, including for the formation of a significant part of budget of the Russian Federation," Novak added.

President Vladimir Putin on Thursday assigned the government several tasks, including expanding foreign economic relations and building new logistics corridors, increasing the technological capabilities of the Russian economy and strengthening financial sovereignty in the face of sanctions imposed by Western countries.
 

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According to some sources Russia sells oil to Turkiye priced at 37 $ per barrel. Big if true.
 

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EU embargo on Russian petroleum products changes the route of diesel cargoes


The EU embargo on Russian refining petroleum products will go into effect on February 5. On the same day, it is expected that the G7 countries will implement the ceiling price application for these products.

Although the negotiations on the ceiling price have not been clarified yet, Western countries are working on two different ceiling prices, high value and low value refinery products.

US Treasury Secretary Janet Yellen, in her statement last week, stated that applying a ceiling price to refinery petroleum products is more complicated than the ceiling price applied to crude oil, but studies are continuing on how the ceiling price for refinery products will be.

Trying to replenish their stocks before the embargo decision came into effect, European countries increased their purchases of diesel, which is one of the largest items in imports of refinery petroleum products with 2.5 million barrels per day, both from Russia and from alternative sources.

According to the information received by the AA correspondent from the real-time data tracking company Vortexa, Russia is still the largest diesel supplier in Europe.

According to the calculation made by Vortexa for the whole of this month, based on the data from January 1-23, as of this month, Russia's diesel supply to countries consisting of the EU, Norway, Switzerland and the United Kingdom is around 615 thousand barrels per day.

Russia accounts for 25 percent of these countries' diesel imports.

Russia was followed by Saudi Arabia, which exported 267 thousand barrels of diesel per day to these countries in the said period, while the US's diesel exports to the same countries were at the level of 156 thousand 700 barrels per day. Turkey's diesel exports to these countries are 64 thousand barrels per day.

Europe's diesel imports from Russia did not fall significantly

Although European countries announced embargo decisions after Russia's war in Ukraine, there has been no significant decrease in Europe's diesel imports from Russia in the approximately one year period since the start of the war.

While Russia's diesel exports to the EU, Norway, Switzerland and the United Kingdom were over 800 thousand barrels per day in February 2022, diesel exports fell below 500 thousand barrels per day in September 2022 alone.

The Middle East countries and the USA increased their diesel exports to Europe the most.


Saudi Arabia and the USA are among the countries that have increased their diesel supply to Europe the most since the beginning of the war.

Saudi Arabia's diesel exports to Europe, which was 87 thousand barrels per day in February 2022, increased continuously in the last 11 months and reached 267 thousand barrels per day as of January 2023.

Diesel exports of other Middle Eastern countries to Europe, excluding Saudi Arabia, also showed an increasing trend after the war and reached 180 thousand barrels per day as of January 2023.

The diesel supply of the USA to Europe, on the other hand, reached 156 thousand barrels per day in January 2023 from 21 thousand barrels per day in February 2022, and reached the highest level in the last 2 years.

While Turkey's diesel exports to Europe, which was at the level of 30 thousand barrels per day in February 2022, varied over the months, it reached its highest level in April 2022 with 77 thousand barrels per day.

According to experts, the embargo decision is expected to fill the gap that will arise from Europe, which is Russia's main supply market, mainly with Asian, African and Latin American countries, while the Middle East countries and the USA stand out among Europe's new suppliers.

Data analytics company Kpler Chief Crude Oil Analyst Viktor Katona told Anadolu Agency (AA) that Russia remains Europe's largest diesel supplier, but diesel supplies from Russia decreased by 170,000 barrels per day compared to last month.

Expressing that despite this decrease, Europe's diesel imports from Russia reached the highest level in the last two years in December 2022, Katona said, "Probably everyone filled their stocks before the sanctions came into effect." said.

Turkish refineries have a competitive advantage

Katona stated that Saudi Arabia currently ranks second in diesel supply to Europe and shared the following information:

"The USA is becoming a larger diesel supplier to Europe. This month, the USA's diesel exports to Europe saw its highest level since October 2020. In fact, the first expectation is the gap between Europe's supplier countries that will arise from Russia. East, Asia and the US were to fill in. But diesel supplies from countries such as Saudi Arabia and Kuwait are still not fully increased. Capacity constraints and delays at the Al Zour refinery in Kuwait may be preventing this. Saudi Arabia produces 1.3-1.4 million barrels of diesel per day and 600,000 barrels of this is the country's own consumption. Saudi Arabia has to balance the rest of its production between its European and Asian buyers. Therefore, it is difficult to increase its exports to Europe further. Kuwait's Al Zour refinery, with a daily capacity of 615,000 barrels, will produce mainly diesel It looks like the second and third units of the refinery will be commissioned by the end of this year.”

On the other hand, pointing out that Turkey is probably the country with the highest chance of being among the important suppliers of Europe, Katona said, "Because Turkey's refineries are mostly diesel-oriented. Turkey can send its own production to Europe and it is itself from Russia. "It can import diesel at discounted prices. At a time when global competition is intensifying, this will create a great competitive advantage for Turkish refineries in terms of profitability." he said.

Russian diesel will find "new ports" in Africa and the Middle East

Vortexa Chief Economist David Wech stated that 400 thousand barrels of the Middle East's 1.4 million barrels of diesel exports per day went to Europe, "150 thousand barrels of the USA's 1.2 million barrels of diesel exports per day, 1.4 million barrels of Asia's diesel exports. 200,000 barrels per day of barrel exports go to Europe. Considering these figures, we can say that Europe can find the diesel it needs from these markets. Europe has already gained a foothold in the global market by almost not reducing its diesel supply from Russia, but increasing its supply from other countries at the same time. It created a mess." he said.

Stating that they predicted that Russian diesel would find "new ports" in Africa and the Middle East with the European embargo, Wech said:

“Currently, the better supply situation for natural gas means that there is no need for extra diesel for electricity generation and industrial use. On the other hand, a possible global recession amid inflationary pressures also restrains diesel consumption. In short, although prices remain high due to long-distance arbitrage. It seems that it will not be difficult for Europe to meet its needs in diesel supply."
 

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Upstart Indian Shipper Helps Get Russian Oil to Market​


Russia has managed to keep its oil moving to world markets, defying fears that sanctions imposed last month would lead to a plunge in exports.

A small office in a suburb of Mumbai helps explain how Russian crude continues to flow. The address is home to an Indian shipping company that didn’t manage a single ship until 2022. It took control of two dozen tankers after the Russian military invasion of Ukraine and has put them to work shuttling Russian crude along newly established trade routes to the Mediterranean, Turkey and India, vessel-ownership and tracking data show.

Gatik Ship Management is among the most active of the upstart companies that have snapped up aging oil tankers to replace Western-owned ships no longer dealing with Russia. That parallel fleet is helping Moscow get crude to buyers in Asia, according to shipping executives, brokers and vessel-tracking, ownership and insurance data.

A person who answered the phone at Gatik’s office confirmed that the company managed about 25 tankers. He said he was an employee of a company that is part of the same corporate group as Gatik.

“The shipping market has always been able to adapt to political change,” said Lars Barstad, chief executive officer of tanker owner Frontline

A European Union oil embargo and a U.S.-led price cap have upended how Russia gets its oil to market. The price cap forbids Western shippers and insurers

The resiliency of Russian oil exports indicates that the price cap is working as intended, preventing a surge in oil prices from the European embargo while complicating Moscow’s ability to make top dollar on its exports.

“There is no real indication that there is a shortage of vessels to transport the oil,” said David Wech

Global benchmark Brent is trading at around $87 a barrel, not far above where it was when the sanctions took effect on Dec. 5.

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Russia’s oil industry, the lifeblood of its economy, still faces stiff challenges. Chief among them is the large discount it offers on its crude to lure buyers. Another round of sanctions will hit vital exports of refined fuels such as diesel next month.

Russia is on track to export 158 million barrels of crude by sea this month, according to commodities-data firm Kpler. That would be one of the top five months on record but is partly a rebound from a drop in shipments after the sanctions took effect in December.

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The availability of tankers isn’t posing a problem, Russian shipping executives said.

Also doing heavy lifting: A Dubai-based subsidiary of Russia’s state-owned shipping giant PAO Sovcomflot. Some major Western shipping firms, including one of Greece’s largest, are moving Russian crude, too, trading oil under the price cap.

A Sovcomflot spokesperson didn’t respond to queries.


Among those providing tankers is Gatik. Since June it has taken 25 ships under its wing, according to a European Union shipping database. Their average age is 17, when tanker owners typically consider sending ships to scrap.

Gatik is the manager of the ships, not the owner, according to the EU database. The registered owners of 20 of the tankers—many of which are named after Greek mythological figures such as Electra, Odysseus and Hector—have the same Mumbai address as Gatik. The company that owns a Gatik tanker called Buena Vista, which delivered Russian crude to India this month, is Social Club Inc.

Corporate structures in which individual tankers are owned by distinct shell companies are common in the shipping industry.

In mid-January, Gatik’s 249-meter Atalanta loaded up on Russia’s Urals crude at Primorsk on the Baltic Sea. From there the St. Kitts & Nevis-flagged tanker sailed toward Vadinar on India’s West coast, Refinitiv and MarineTraffic data show.

Six other Gatik tankers loaded up on Russian crude between Dec. 5 and Jan. 14, including one that made the trip twice, vessel-tracking data show.


Gatik ships have sailed from Russia’s Baltic Sea and Black Sea ports where crude trades beneath the cap.


The U.S. designed the sanctions so Western and Japanese insurance clubs—associations that provide coverage against accidents such as oil spills—would underwrite tankers. Gatik took out this cover, called protection-and-indemnity insurance, from the American Club, according to an insurance database and a senior manager at the club.

Insurers require tanker operators that move Russian crude to give a written assurance that the price will be below the cap to abide by the sanctions.

Other ships carrying Moscow’s oil are doing so outside the mechanism specified by the cap. More than 75 loadings of Russian crude from Dec. 5 through Jan. 14 were onto tankers that lacked insurance from Western and Japanese clubs, which dominate shipping insurance, insurance data show.

Tankers run by Sun Ship Management, Sovcomflot’s Dubai subsidiary, accounted for 46 of the 160-plus loadings of Russian crude in that period.

All told, tankers controlled by companies in the United Arab Emirates, Hong Kong, China, India and Russia shipped more than 60% of Russian crude since the price cap took effect, according to Yen Ling Song, analyst at S&P Global Commodities at Sea, while 29% moved on European-controlled ships, mostly from Greece and Turkey. In contrast, European and American operators accounted for more than 90% of Kazakh oil shipments from Russian ports, showing how Western shippers are avoiding Moscow’s crude. Ships carrying Russian oil were on average six years older.

Some mainstream tanker operators are making use of the price cap. Among the most active is Greece’s TMS Tankers Ltd., founded by shipping tycoon George Economou and part of TMS Group. TMS-managed tankers loaded Russian crude 14 times between Dec. 5 and Jan. 14, shipping data show.

A TMS spokeswoman didn’t respond to requests for comment. TMS tankers including Lipari, Stamos and Lovina picked up Russian crude from the Baltic and Murmansk in January, people familiar with the shipments said.

The TMS tankers were insured by Norway’s Gard P. & I. (Bermuda) Ltd. according to a spokeswoman for the insurance association. “Nobody wants an uninsured tanker grounding on their shores,” she said.
wsj.com/articles/upstart-indian-shipper-helps-get-russian-oil-to-market-11674985846
 

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Sanctions on Russian Diesel Show Early Signs of Working​

  • Discount of Russian diesel edges wider as EU bans imports
  • Final sale price of Russian fuel could be significantly higher


With international sanctions on Russia’s diesel shipments now in place for more than two weeks, the early signs are that they are having at least some of the desired effect.

The Group of Seven and the European Union’s latest measures were essentially designed to do two things: cut Moscow’s revenue but keep the barrels coming.

Since the new rules kicked in on Feb. 5, the export price of Russian diesel has dropped further relative to non-Russian supplies, with the discount topping $35 a barrel at the start of last week — then dipping slightly below that figure on Monday — according to data provided by Argus Media Ltd. and converted into barrels by Bloomberg.

At the same time, exports have largely held up. In the first half of February, shipments of diesel-type fuel from the nation’s ports averaged more than 1 million barrels a day — a slight drop from January, but still well above the 2022 daily average — according to data from Vortexa Ltd., compiled by Bloomberg.

The broader diesel market is also relatively calm, an important detail for the G7. The price of diesel futures relative to crude oil, known as the crack spread, recently hit its lowest in almost a year. The structure of the fuel’s forward curve, a key supply-demand metric, indicates no obvious panic.

What remains unclear, however, is the price that Russian fuel is ultimately being sold at, and where that money ends up.

Different prices​

Russian oil prices are often given on what’s called a Free-on-Board, or “FOB,” basis. That’s essentially the price at the Russian port where the vessel is loaded.

The latest FOB Baltic Sea Russian-origin diesel price from Argus equates to about $74 a barrel, well below an EU- and G7-agreed price cap of $100. But diesel-type fuel is then shipped from that region to countries including Turkey, Morocco and Tunisia.


Buyers in such locations may be paying significantly more than the FOB price. They certainly are in the crude oil market: Russian Urals delivered to India was recently more than $20 a barrel more expensive than its Baltic export price.

“There are fewer deals being conducted overtly through brokers, and more behind-closed-door deals,” said Mark Williams, research director, short term oils at Wood Mackenzie Ltd. That diminishes price transparency for the wider market.

Smooth Sailing?​

There’s also the question of whether Russian exports will continue as relatively smoothly as they have so far.

The International Energy Agency said on Wednesday that it expects Russia to struggle to place diesel, and that it will subsequently have to cut refining runs.

Vortexa’s data show that the rate of diesel-type fuel exports from Russia in the first half of this month has only been surpassed on a monthly-average basis nine times in more than seven years.

And while they are down by about 150,000 barrels a day month-on-month, it’s important to bear in mind that the rates of export in January and December were the highest on record in data going back to the start of 2016.

Still, with higher Russian refinery maintenance and lower crude runs seen in coming months, the country’s diesel exports are expected to further decline going forward, according to Williams.
 

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Saudi Arabia, OPEC+ producers announce surprise oil output cuts​


Saudi Arabia and other OPEC+ oil producers on Sunday announced voluntary cuts to their production amounting to around 1.15 million barrels per day in a surprise move they said was aimed at supporting market stability.

The group had been largely expected to stick to its already agreed 2 million bpd cuts when its ministerial panel, which includes Saudi Arabia and Russia, meets virtually on Monday.

Last October, OPEC+, which comprises the Organization of Petroleum Exporting Countries (OPEC) and allies led by Russia, agreed output cuts of 2 million bpd from November until the end of the year, angering Washington as tighter supply boosts oil prices.

The U.S. has argued that the world needs lower prices to support economic growth and prevent Russian President Vladimir Putin from earning more revenue to fund the Ukraine war.

Sunday's unexpected voluntary cuts, which start from May, come in addition to the ones already agreed in October.

Riyadh said it would cut output by 500,000 bpd while Iraq will reduce its production by 211,000 bpd, according to official statements.

The UAE said it would cut production by 144,000 bpd, Kuwait announced a cut of 128,000 bpd while Oman announced a cut of 40,000 bpd and Algeria said it would cut its output by 48,000 bpd. Kazakhstan will also cut output by 78,000 bpd.

Russia's Deputy Prime Minister Alexander Novak also said on Sunday that Moscow would extend a voluntary cut of 500,000 bpd until the end of 2023. Moscow announced those cuts unilaterally in February following the introduction of Western price caps.

After Russia's unilateral reductions, U.S. officials said its alliance with other OPEC members was weakening, but Sunday's move shows the cooperation is still strong.

The Saudi energy ministry said in a statement that the kingdom's voluntary cut was a precautionary measure aimed at supporting the stability of the oil market.

Oil prices fell to 15-month lows earlier this month in response to the banking crisis that followed the collapse of two U.S. lenders and resulted in Credit Suisse being rescued by Switzerland's biggest bank UBS.

"OPEC is taking pre-emptive steps in case of any possible demand reduction," Amrita Sen, founder and director of Energy Aspects, said on Sunday.

 
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