By JAKE RUDNITSKY
Russias crude exports on tankers are poised to fall to
the lowest in at least six years as a government push to
improve and expand domestic refineries means more oil is
exported as fuels like diesel.
Seaborne crude shipments from the worlds biggest energy
exporter via the state-run pipeline system in August will
fall 9.2% from this month to 2.215 million bpd, according to
loading programs obtained by Bloomberg News.
Thats the lowest since Bloomberg began
tracking the data in 2008.
Russias two biggest crude terminals, Primorsk and
Novorossiysk, will both export the least on record.
Russian oil companies are refining
more crude domestically
after President Vladimir Putin pushed them to spend billions
of dollars modernizing plants. Output of diesel and fuel oil
are the highest since at least 2009, Energy Ministry data
This puts pressure on Europe
an refiners who are already
receiving less Russian crude as flows are diverted to China,
which has been less critical of the Kremlins role in
Ukraine, according to KBC Energy Economics.
This trend of falling crude exports means were
finally seeing results from the refinery modernization
Alexander Nazarov, an oil analyst at OAO Gazprombank in
is picking up and crude
output has peaked.
Russia produced 10.55 million bbl of crude in June, up 0.1%
from a month earlier in the first increase since January,
according to the Energy Ministrys CDU-TEK unit. The
countrys refineries operated at the highest rate in two
years on June 26, with offline daily processing capacity
falling to 26,000 metric tons, before rising to 48,500 tons
on July 23, according to CDU-TEK.
Less crude and more products out of Russia will create
problems for the Europe
sector, said Ehsan
Ul-Haq, senior market consultant at KBC Energy Economics in
European refiners have struggled to turn a profit as the
recession curbed demand for fuel, more efficient plants
opened in Asia and the Middle East, and the boom in US oil
production closed a major export market. The biggest wave of
closures since the 1980s has left the region more dependent
on foreign imports of fuel.
Developed economies in Europe got 44% of their net oil
imports last year from Russia, according to the Paris-based
International Energy Agency.
Leaders in Europe are considering proposals for new sanctions
against Russia as officials begin downloading data from the
voice recorders of the Malaysian Air jet that was downed last
week in Ukraine, killing 298 people. Since the annexation of
the Ukrainian region of Crimea in March, Europe
and the US have held back
from imposing restrictions on Russias exports of oil
and gas, which provide half the countrys budget.