As sanctions bite, these ‘obscure’ new players are shipping half of Russia’s oil to India & China
With Russia facing crippling sanctions from the West, dozens of new middlemen, including companies without prior records, have been handling the trading of Russian oil to countries like India and China At least 40 such middlemen handled Russian oil trading between March and June, according to a Reuters tally. The new players have shipped at least half of Russia’s overall crude and refined products exports of 6-8 million barrels per day (bpd) on average this year, turning the little-known companies collectively into some of the world’s largest oil traders. The reporting shows that in May, Russia, one of the world’s top three oil producers, supplied record volumes to China and India, which have not imposed sanctions on Moscow and became its leading buyers since the war in Ukraine. India has been one of the top buyers of discounted Russian oil over the last few months with domestic refiners lapping up crude from the European country at attractive prices.
‘Refining capacity to grow at slower pace’
Indian refining capacity would expand at a far slower pace than was estimated earlier, according to latest government projection. Refiners would add 56 mtpa by 2028 to increase domestic capacity to 310 mtpa. “As per the data compiled by Centre for High Technology (CHT), a technical wing of ministry of petroleum and natural gas, the refining capacity of Indian refineries is projected to increase by about 56 mtpa by the year 2028,” junior oil minister Rameswar Teli told Lok Sabha on Thursday. Domestic refining capacity currently stands at 254 mtpa. Five years earlier, an oil ministry panel had prepared a detailed report on refining capacity and had projected the capacity to rise to 259 mt by 2020, 415 mt by 2025, and 439 mtpa by 2030. These projections were based on “firm plans and the projects already conceptualised and accepted in principle”, the committee had then said.
Russian ESPO Oil Price Surges On Strong Chinese Demand
Strong demand in China has sent the price of Russia’s ESPO crude blend surging to the highest in eight months as ESPO discounts to Brent are at their narrowest since the EU embargo on Russian oil imports came into effect in December, multiple trade sources have told Reuters. The EPSO crude going to China in September is trading at discounts of just $2-$2.50 per barrel to ICE Brent on delivered-ex-ship (DES) basis, according to the sources. This compares with discounts of around $4 per barrel for August. “August prices were already very expensive, but we were shocked to see that offers for September cargoes started at $2 discount,” one trade source told Reuters. Strong demand for cheaper Russian crude from China’s independent refiners, competition from Indian refiners, and the OPEC+ supply cuts, including from Russia, have all combined in recent weeks to lift the price of the ESPO crude. Early this month, the price of Russian ESPO crude jumped to the highest in seven months as Chinese buyers rushed to buy it ahead of a 500,000-bpd cut in exports Russia has pledged for August. ESPO has been trading consistently above the G7 price cap of $60 per barrel because it is the preferred Russian blend of Chinese refiners. The ESPO blend is lighter and sweeter than the flagship Russian blend Urals, which has normally traded at a more significant discount to Brent crude. Despite the recent jump in ESPO prices, the Russian crude grade remains the cheaper option for Chinese refiners because similar grades from West Africa and Brazil are trading at premiums over Brent for deliveries in September and October. If the OPEC+ group further reduces supply, the ESPO price could jump again and narrow the discount to around $1 per barrel, an oil trader told Reuters. Tanker-tracking data suggests that Russia’s crude oil exports by sea continue to slump and are now well below the February levels and nearly 1.5 million barrels per day (bpd) lower than the recent peak at the end of April.
BPCL still in talks for Russian oil deal, discounts narrow
Indian refiner Bharat Petroleum Corp (BPCL.NS) is still in talks with Russian oil major Rosneft (ROSN.MM) to buy oil under a term deal, its head of finance said, adding that discounts on Russian oil are narrowing. “Yes, there were discussions happening with Rosneft but not yet concluded,” Vetsa Ramakrishna Gupta told an analysts’ conference after the company’s June quarter earnings report. Reuters last month reported that BPCL is in talks to buy up to 6 million metric tons of Russian oil under a term deal with Rosneft. Indian refiners have been snapping up discounted Russian oil since many other countries imposed sanctions on Moscow after its invasion of Ukraine. The discounts make Russian oil cheaper than similar grades from the Middle East. But Gupta said discounts on Russian oil are shrinking compared to previous quarters. Narrowing discounts amid tightening supply made Russian Urals oil prices for August loading jump above the $60 per barrel price cap, sources told Reuters last month.
As sanctions bite, these ‘obscure’ new players are shipping half of Russia’s oil to India & China
With Russia facing crippling sanctions from the West, dozens of new middlemen, including companies without prior records, have been handling the trading of Russian oil to countries like India and China At least 40 such middlemen handled Russian oil trading between March and June, according to a Reuters tally. The new players have shipped at least half of Russia’s overall crude and refined products exports of 6-8 million barrels per day (bpd) on average this year, turning the little-known companies collectively into some of the world’s largest oil traders. The reporting shows that in May, Russia, one of the world’s top three oil producers, supplied record volumes to China and India, which have not imposed sanctions on Moscow and became its leading buyers since the war in Ukraine. India has been one of the top buyers of discounted Russian oil over the last few months with domestic refiners lapping up crude from the European country at attractive prices.
GAIL scouts for LNG sources, plans to grow long-term volumes by 50
GAIL is planning to tie up 7-8 million tonnes per annum of long-term liquefied natural gas (LNG) from diverse sources as it bets big on domestic gas demand and aims to play a leading role in India’s transformation into a gas-based economy, its chairman has said. “GAIL is committed to ensuring that the domestic demand is well supplied and protected from price shocks. To do the same, GAIL is looking to grow its long-term volumes by at least 50% or 7-8 million metric tonnes per annum in a staggered manner till 2030,” GAIL chairman and managing director Sandeep Kumar Guptatold ET in an interview. The company is in talks with suppliers in several countries including the US, Qatar, the UAE, and other countries east of India, he added. Gupta, the former finance chief of Indian Oil Corp, took over as the chairman and managing director of GAIL last October in the middle of a global energy crisis that had cut off afifth of its LNG supplies after a former German unit of Russia’s Gazprom stopped supplying.