The export of oil from Russia through the oil pipelines of Transneft is declining - for four months it fell by 4.4%, to 75 million tons. In an oil pipeline company, this is associated with an increase in sulfur content in the west, which leads to a reduction in purchases by European buyers. According to analysts, the dynamics of exports is likely to be affected by the reduction in production within the OPEC + deal, as well as the growth in domestic refining, which is becoming more profitable as oil prices soar.
Transneft reduced oil exports in the four months of 2018 by 4.4%, to 74.88 million tons, adviser to the head of the pipeline company Igor Demin told RIA Novosti. The annual export plan is 226.8 million tons, based on oil company applications, which is 3% below the level of 2017. At the same time, deliveries to refineries in Russia via pipelines increased by almost 1.5% over the four months to 80.47 million. It is assumed that the decline in oil exports will be compensated by increasing the transfer of petroleum products to foreign markets by 16%, to 27.7 million tons.
This is not the only reason for the decline in oil exports. As Igor Dyomin told Kommersant, European consumers located on the southern branch of the Druzhba pipeline (primarily Hungary and Slovakia) express dissatisfaction with the increase in sulfur content, which increased this year to 1.75%. According to the Urals standard, the sulfur content is 1.8%, but in previous years it was usually about 1.6%. As explained by Mr. Demin, oil supplies to Hungary this year were reduced by 18%, to Slovakia - by 8%. According to the northern branch of "Friendship" (the main consumers of Poland and Germany), the reduction in deliveries was 1.4%.
The problem of a growing level of sulfur has intensified this year due to the fact that as a result of expanding the diversion from the ESPO to China, as well as increasing supplies to China via Kazakhstan, about 30 million tonnes of low-sulfur West Siberian oil previously directed to the west will be diverted to the east. Exports of oil from the Russian Federation via the pipeline system to China in four months, according to Transneft, grew by 47%, to 12.4 million tons. As a result, the level of sulfur in the western direction is increasing, although the deal with OPEC to reduce oil production somewhat restrains this dynamics - the companies primarily cut production in old deposits where the sulfur content is higher than on new projects.
To solve the problem, Transneft proposed to allocate a separate stream of sour oil to the port of Ust-Luga, but the idea has not yet developed.
According to Kommersant, the problem of raw materials quality will be discussed at a meeting in the Ministry of Energy on May 11. "We believe that we have a fairly large volume of light oil to appear on the horizon of 2019-2020, primarily due to (new) northern projects," Kirill Molodtsov, Deputy Minister of Energy said at the end of December.
Export is also falling due to the OPEC + deal, notes Darya Kozlova of Vygon Consulting: in January-April, oil production in Russia decreased by 1%, to 179.4 million tons. "In addition, there is a substitution of falling production of traditional regions by new deposits, whose oil is transported outside the Transneft system - Prirazlomnoye, Novoportovskoye, Trebsa and Titova, etc.," notes Kozlova. In addition, as oil prices rise, refinery processing in Russia is becoming more attractive to companies compared to crude oil exports, as the "customs subsidy" - the difference between the export duty rates for oil and oil products - increases. According to Daria Kozlova, the average refining margin in Russia in early 2018 was $ 4.2 per barrel against $ 3.1 in 2017.