Russia’s crude exports shrug off halt to key Pacific grade Sanctioned but not destroyed
A temporary halt in shipments of Russia’s Sokol crude from Sakhalin Island on the Pacific Coast was offset by a surge in flows of ESPO from nearby Kozmino, lifting four-week exports to the highest level in almost four months.
The jump in this less volatile measure of overall exports was boosted as a plunge seen in late January — driven by a storm that shut Kozmino and disruptions including a drone strike at the Baltic’s Ust-Luga terminal — finally dropped out of the calculation.
That unwinding saw four-week average shipments climb to the highest since the week ended Nov. 5, exceeding Bloomberg’s estimate of Moscow’s pledged export target by about 190,000 barrels a day. Weekly flows in the seven days to Feb. 22 rose by about 365,000 barrels a day to 3.5 million, some 215,000 barrels a day above target.
The temporary absence of Sokol cargoes stems from a lack of shuttle tankers needed to move the grade from the De Kastri export terminal amid issues with deliveries to Indian refiners. Moscow has struggled since December to get Sokol into India, the main market for the output of the Sakhalin 1 project, with the Asian nation's refiners wary of US sanctions and complaining that the supplies are too expensive.
While three Sokol cargoes were delivered to India this month and several others have been diverted to China, at least 14 more — totalling about 10 million barrels — are still sitting on vessels. All seven of the specialized vessels that haul the grade from the export terminal had cargoes on board last week, leaving none available to take on fresh shipments. The first to discharge in China last week has returned to De Kastri, where it began loading new cargo on Tuesday morning; two more should reach the terminal late in the week.
Meanwhile, Russia’s oil pipeline operator Transneft plans to construct three additional storage tanks at Kozmino as part of plans to boost shipments of ESPO, potentially diverting more crude away from the country’s western ports.
The gross value of Russia’s crude exports rebounded to a three-week high, rising to $1.73 billion in the seven days to Feb. 25 from $1.55 billion the previous week. Meanwhile four-week average income continued to rise, up by $115 million to $1.7 billion a week.