Refinery in Turkey at full capacity in May, adding to Urals shortage

Azerbaijan’s state-owned SOCAR plans to reach full oil refining capacity of 200,000 barrels per day at its Turkish STAR plant in May, three industry sources said, adding to shortages of Russian Urals crude in southern Europe.

STAR, SOCAR’s $6 billion Turkish oil refinery launched last year, can process Russia’s flagship Urals blend, Iraqi Kirkuk and similar grades but has only bought Russian crude so far, according to industry sources and Refinitiv Eikon data.

“STAR is working in a test mode so far, in April we will supply it with the same amount of oil as in March,” a source in SOCAR Turkey told Reuters. “Yet in May, the plant will start processing oil at its full capacity.”

According to data from Refinitiv Eikon and trading sources, STAR processed around 700,000 tonnes of oil, or 166,000 barrels per day, in March. A second source, familiar with the plant’s plans, confirmed STAR is due to process 200,000 bpd next month.

Urals differentials in the Mediterranean have traded at a premium to dated Brent in January-February and reached the highest premium since 2013 earlier this year due to limited exports of the grade and a shortage of sour grades due to a lack of Iranian crude because of sanctions. BFO-URL-E

And as the sanctions waivers by the United States on Venezuelan oil sales expire later in April, demand for Urals, coupled with the need for more volumes at STAR, is going to tighten Russia’s oil supply in southern Europe, traders say.

SOCAR did not reply to a Reuters request for a comment.

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