«There have been and always will be fluctuations in export deliveries»
August has been a month of amazing metamorphosis for Russian oil exports, according to Bloomberg. First, the agency, citing data from the company Vortexa (which monitors the tracks of cargo transportation), reported a drop in energy supplies from the Russian Federation abroad to a 15-month low. And then it released estimates, according to which, in just a week from the 20th to the 26th, Russian oil exports increased by 800,000 barrels per day. So what is happening with the domestic energy trade: crisis or rise? MK looked for the answer from experts in the energy market.
By the end of August, Russia's commodity revenues rose by 35% to $47 million per day on average over four weeks. The volume of exports of its «black gold» by sea reached 3.4 million b/d, approaching the maximum values since the end of June, but falling short of February's figures of about 450,000 b/d. At the same time, Bloomberg notes, the largest growth was observed in the Baltic ports of Primorsk and Ust-Luga. According to the agency, the latest (August 20-26) surge is largely due to the seasonal factor and the low base effect: in June-July, energy supplies abroad traditionally decline, as demand for petroleum products within the country grows. In addition, in August, Russia additionally (and voluntarily) reduced oil exports by 500,000 barrels per day, cutting production by the same volume. Previously, production was reduced by the same amount in March.
China and India are still the largest buyers of Russian crude — both countries exported just over 1 million barrels of oil per day in the last week of August, according to Bloomberg. The volume of deliveries to Turkey amounted to about 150,000 bpd, to the rest of Europe — about 125,000 bpd.
At the same time, Russia's export earnings in August grew by 35%, to $47 million per day on average over four weeks.
So what is ultimately happening with Russian raw material exports in the long run, can we talk about any sustainable trend? This topic is covered with a thick layer of conflicting information. For example, the same Bloomberg recently reported that China began to give preference to Iranian oil, since it is offered at a discount of $10 per barrel to Brent and is much cheaper than Russian oil. If this is true, how big is the threat posed by Iran? After all, if in political terms the country is an ally of the Russian Federation, then in terms of foreign trade, it turns out that it is a dangerous competitor, if not an adversary. With these questions, we turned to the expert of the Financial University under the Government of the Russian Federation Igor Yushkov.
— In general, after the February statement by Deputy Prime Minister Alexander Novak that in March Russia would reduce production “voluntarily” by 5% (500,000 b/d), our country has consistently reduced exports as well. As for the end of summer specifically, this period, as you know, is the peak of road traffic, people return to the cities from their summer cottages. Plus, diesel consumption is on the rise as we have a farm harvesting campaign in full swing. As a result, the consumption of petroleum products rises sharply, more of them are supplied to the domestic market. Accordingly, exports are declining. There have always been and will always be fluctuations in the volume of export deliveries, and there is no need to be afraid of this. It is also important to remember that the government closed the statistics on the indicators of the oil and gas complex, so it is difficult to confirm or deny Bloomberg data. It turns out that when there is no official statistics from the state, this “emptiness” is filled by other sources, which sometimes paint a frightening picture for some reason.
-Declaring its intention to reduce exports in August, Russia did not disclose how exactly it will use the volumes that were intended for sale abroad. We partially processed this crude oil, increasing the volume of processing, which casts doubt on Bloomberg data. Part of the fuel received remained inside the country. As for Iran, Russia does not have tough competition with it for the Chinese market. Indeed, a priori any oil producers are competitors on the world stage. At the same time, Bloomberg paints the situation in such a way that allegedly Beijing has to choose between two traditional suppliers — Russia and Iran, since it has some internationally agreed limit on the purchase of sanctioned oil. In fact, this is not so: both states provide China with the most favorable price conditions, and it calmly digests both our and Iranian volumes. Without giving preference to any one of the parties. In general, Russia has no problems with the sale of raw materials: in which case we will redirect it to other markets, there are enough people who want to buy it. Iran, on the other hand, supplies all its oil exclusively to China, since the rest do not want to deal with it because of the threat of US sanctions. China, being a super-powerful player, ignores the factor of secondary sanctions.
— I doubt that deliveries from Novorossiysk have been so drastically reduced. Everyone would have trumpeted about this «catastrophe». First of all, Kazakhstan and those international companies that produce oil there and export it through the CPC (Caspian Pipeline Consortium) pipeline. More than 50 million tons of oil flow through this key pipeline for Kazakhstan — a huge figure for Astana. If the port of Novorossiysk ceased to fulfill its transit functions, we would immediately see it: for Kazakhstan it would be a colossal loss. In the context of the drone situation, it is naïve to talk about the damage only in relation to Russian exports: Kazakhstani oil, which is shipped in the port of Novorossiysk, is equally threatened. In both cases, the rates of freight and insurance of carrier ships are growing. The drone operators that attacked the tankers obviously did not understand whose oil was on board — Russia or Kazakhstan.