With the escalation of the tensions between Europe and Russia over the Ukraine, there is a threat of further sanctions, which could include the energy sector.
With the escalation of the tensions between Europe and Russia over the Ukraine,
there is a threat of further sanctions, which could include the energy sector.
According to the IEA, 2013 saw Russia export just over 3 mill barrels per day of crude oil to OECD Europe,
which accounted for 71% of the total Russian crude exports.
Some two thirds of this total were exported by sea, mainly from the Baltic and Black Sea regions,
providing vital support for both Suezmaxes and Aframaxes, said Gibson Research in a recent report.
Russia also exports a considerable amount of petroleum products with 1 mill barrels per day
shipped to OECD Europe last year, representing around 36% of the total Russian petroleum products exports.
Most of these shipments originated from the Baltic/Northern Europe and Black Sea ports, generating significant
demand for product tankers- mainly MRs.
Although Europe has been an important outlet for Russian oil exports for many years, the country has been
trying to diversify its export markets by placing emphasis on the Asia/Pacific region.
Crude oil exports through the ESPO pipeline, both via Kozmino and the pipeline direct to China, amounted to 0.75 mill barrels per day last year, its highest level since the start of 2010. On the back of further crude oil deals signed by Rosneft with China, there will be more to come.
The latest stand-off with the West can only intensify Russia’s attempts to sell to the Asian markets, Gibson said.
Europe is also dependant on Russian exports, as oil - crude, products, NGLs, plus other feedstocks - accounting
for 44% of total net oil imports in 2013 into the region. This would suggest that any sanctions on crude oil/products
supply will be difficult to implement, due to costs and the ability to source an alternative supply.
There is currently great uncertainty as to what shape any sanctions will take- if any. Future political developments
should be monitored very closely given the amount of barrels of oil at stake.
At present, there appears to be no threat to crude, or products supply. However, long term, any escalation of
tensions between Europe and Russia could decrease the dependence on each other resulting in the disruption
of major tanker trades, Gibson warned.