Western sanctions push China’s Yanchang Petroleum to halt Russian oil purchases

Chinese state-backed refiner Yanchang Petroleum, supported by the provincial government of Shaanxi, has decided to exclude Russian oil from its latest crude purchase tender covering deliveries between December and mid-February, according to two traders familiar with the matter, quoted by Reuters.

Located in the landlocked northern province of Shaanxi, Yanchang has traditionally been a consistent buyer of Russian crude, typically purchasing one shipment per month — usually ESPO blend or Sokol, both grades exported from Russia’s Far East, one of the traders said.

However, a wave of recent Western sanctions on Russian oil shipments, including new US measures targeting Moscow’s two largest exporters, has prompted several Chinese state oil firms and Indian refiners to steer clear of Russian crude amid fears of being hit by secondary sanctions. Both China and India remain Russia’s principal oil export destinations.

With a refining capacity of 348,000 barrels per day, Yanchang ranks among China’s largest inland refiners and holds an annual import quota of 3.6 million metric tons, equivalent to about 26 million barrels. The refinery typically sources imported crude through Tianjin port, near Beijing, from where the oil is transported by rail to Shaanxi.

The decision follows the US announcement on October 22 of sanctions against LUKOIL and Rosneft, due to take effect on November 21. Earlier this year, Gazpromneft and Surgutneftegaz were also placed under similar restrictions.

In early November, Bloomberg reported that several Chinese refineries had started refusing imports of Russian oil due to these sanctions. Data indicates that fuel shipments via the Northern Sea Route to Asian markets have fallen by 4.2% this year, amounting to 1.83 million tons — underscoring the impact of tightening restrictions on Moscow’s eastern energy exports.

By Tamilla Hasanova