Daily Energy Report
Russian oil in Europe, price cap evasion, building up a Russian tanker fleet, Colombia’s fracking ban, OPEC-IEA war of words, Nigeria’s LNG ambitions, and more
CHART OF THE DAY: Petroleum Products of Russian Origin Reaching Europe?
The Netherlands’ imports of petroleum products from China increased immediately once the deadlines were set for sanctions on Russian oil. As the chart shows, imports jumped from 72,000 barrels per day (b/d) in January to around 120,000 b/d in February before Europe banned Russian petroleum products on February 5. Although we cannot prove that some of these imports were derived from Russian crude, Russian oil products are still reaching Europe.
"Diesel from Russia continues to be on European and Spanish markets," Josu Jon Imaz, the chief executive of Spanish oil company Repsol, said today, according to Reuters. He added that the oil product is reaching European markets through third countries that are masking its origin.
Dutch imports of petroleum products from China later dropped to 55,000 b/d in March, a decline that can be attributed to China’s economic recovery that has increased domestic oil demand. Chinese refiners have recently slashed exports of gasoline and diesel, prioritizing local sales instead, Bloomberg reported last week, a topic that we covered in our Daily Energy Report (DER).
EOA’s Main Takeaway:
Although the Netherlands has halted direct imports of Russian oil, this does not mean that oil supplies of Russian origin cannot make it to the country as we noted above. This is a detail that even the Dutch governmental institution,Statistic Netherlands, acknowledged in February, saying that “despite the import ban on Russian oil that has been in place since 5 December, it is still possible that Russian oil is being imported. If oil is mixed with oil from other countries, one cannot tell by its composition what the country of origin is.”
On January 23, we told readers that China, one of the world’s top refiners, is among the key markets to watch as it will most likely play a significant role in exporting oil products derived from Russian crude. We believe this trend will not only be seen in China but also in other Asian countries, as well as in some OPEC+ producers.
While EU members have banned imports of Russian oil, China is already reaping the benefits of European sanctions by importing cheap Russian crude oil. Beijing will continue to take advantage of such Western restrictions by exporting petroleum products at world prices to the European market and which are made from Russian crude.
STORY OF THE DAY
TRADEWINDS: Russia must build up its tanker fleet, says Sovcomflot chief
The chief executive of Russia's top shipping company Sovcomflot has said that Russia needs to construct its own fleet and improve services to maintain control of its energy exports, TradeWinds reported based on local reports.
Igor Tonkovidov was cited as saying that Russian-owned vessels "shipped just 15% of oil, products, and gas from the country’s ports in 2022.” Such a figure according to Tonkovidov revealed a “low level of control over maritime export logistics in Russia,” TradeWinds reported.
EOA’s Main Takeaway:
One of the main lessons in the oil industry was learned in the early 1950s: After Iran’s prime minister at that time, Mohammed Mosaddagh, nationalized the oil industry, the country did not have any tankers to carry Iranian oil after the UK convinced other governments to avoid transporting Iran’s oil via their vessels. And when Italy tried to ship Iranian oil, the British navy boarded one of its tankers. This explains why Iran and Saudi Arabia nowadays own large fleets.
Russia is now in a similar position. Owning tankers means they can insure them on one hand and control their use on the other. Moscow has already bought hundreds of tankers to transport crude. It also needs to purchase ships that can carry oil products.
For now, Russia is trying to provide insurance for various foreign tankers that ship Russian oil and buy old and new tankers. Both will reduce the cost of shipping and enable Russian companies to fetch better prices (lower discounts).
In short, owning oil tankers by a large oil producer like Russia is a matter of national and economic security.
NEWS OF THE DAY
1- AFP: Dutch unveil 28bn-euro package to cut greenhouse emissions
The Netherlands has announced a 28-billion-euro package of at least 120 measures for cutting greenhouse gas emissions and fighting climate change, AFP reported. These include boosting cleaner energy by closing all gas and coal-fired power plants by 2035 and increasing the number of electric cars on the road, according to the report.
The Dutch government's goal is to reduce carbon dioxide emissions by 55% by 2030 compared to 1990, according to Dutch Climate and Energy Minister Rob Jetten.
EOA’s Main Takeaway: