Russia raises oil product exports to China, Kazakhstan in March: report – S&P Global
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Russia raises oil product exports to China, Kazakhstan in March: report
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Fuel oil makes the bulk of exports to China
Gasoline exports to Kazakhstan rise 32 fold
Russia has increased the exports of oil products by rail to China and Kazakhstan in March, the country’s Interfax news agency reported April 6.
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Fuel oil represented the bulk of the exports to China, with 394,200 mt exported, 43.6% higher on the month. Diesel exports recorded similar growth of 39.5% to 343,100 mt. Bitumen and residue amounted to 18,700 mt, marking a 34.9% increase on February. Overall, 756,900 mt of oil products headed to China last month.
Bitumen and residue represented the bulk of exports to Kazakhstan at 15,700 mt, or double the February volumes. Diesel exports were 19.5% higher on the month at 11,900 mt. Gasoline exports increased 32 fold to 7,600 mt, and for the first time in months, Russia exported jet fuel to Kazakhstan.
Since the start of 2022, Russia has shipped by rail 1.819 million mt of oil products to China and 151,900 mt to Kazakhstan.
Reduced exports elsewhere
The increased exports of fuel oil to China follow reduced shipments to other destinations as international buyers increasingly shun Russian-origin products following Moscow’s invasion of Ukraine.
As a result of the diminishing export outlets, fuel oil prices inside Russia have tumbled and refineries that have lower complexity are reducing throughput in order to cut the excess supply, according to market sources. Russian refineries produce around 3 million mt of fuel oil per month, with around 80%-90% heading to exports.
Russia’s oil major Lukoil is expecting potential refinery closures due to the lack of outlets for fuel oil and spare storage, Russia’s Kommersant daily reported on April 7.
The company proposes to ship the excess output to the country’s power generation and temporarily lift the large fines for environmental damage.
Russian utilities have increasingly switched to natural gas and typically use fuel oil as reserve fuel during the winter heating season.
Meanwhile, Russian gasoline supply was also rising, as more naphtha was heading into the gasoline poll due to reduced exports. Market participants were concerned that domestic demand was weak on poor prospects for domestic tourism to southern regions, due to the war in nearby Ukraine.
Kazakhstan shortages
The higher exports to Kazakhstan come as the country has repeatedly extended bans on oil products exports by trucks after experiencing shortages of diesel and jet fuel last year, attributed to overlapping refinery turnarounds.
Meanwhile, the energy ministry in early April once again proposed extending the current ban for another six months in order to prevent shortages of oil products, it said.
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