Chinese state-owned oil and gas companies have resumed purchases of Russian oil after a four-month hiatus - Reuters
Kyiv • UNN
Sinopec and PetroChina are looking for cargoes from Russia due to shortage risks and favorable prices. Russian oil is cheaper than its counterparts from Brazil and West Africa.
Chinese state-owned oil and gas companies, seeking to avoid supply shortages due to the war in the Middle East, have resumed their search for Russian oil cargoes after a four-month hiatus, taking advantage of an exception to US sanctions. This was reported by Reuters, citing five sources, writes UNN.
Details
The trading units of state-owned Sinopec and PetroChina this week approached suppliers about possible purchases of Russian oil — these would be their first purchases since November, said sources close to the Russian oil trade.
The publication notes that although no deals had been confirmed as of Tuesday, two sources said that deals could be concluded soon, as Russian oil remains cheaper compared to competitors from Brazil and West Africa, despite rising prices and premiums due to the US and Israel's war against Iran, which began on February 28.
A state oil trader reported that Chinese companies are "assessing the situation," including whether payment and delivery are possible within the 30-day exception, which began on March 12 and applies to cargoes that have already been loaded.
Sinopec and PetroChina have not yet provided comments.
One source familiar with PetroChina's operations noted that companies may also be trying to secure cargoes amid the "chaos" by buying Russian-origin oil from independent Chinese refiners or traders who already have it in storage.
Some "teapots" (independent refineries) are willing to resell, as it brings them more profit than refining at their own plants
A cargo of Russian ESPO crude, the main export grade from the Far East, arriving in late April, was last offered by a Russian producer at $8 a barrel above the July ICE Brent contract on a delivered basis. In comparison, Brazilian Tupi crude for April was valued at a premium of $12–15 over dated Brent.
The price difference for ESPO, which is mainly consumed by independent Chinese refineries, changed last week from a discount of $7–10 for March cargoes to a premium of $2–3 for April/May deliveries.
China's seaborne imports of Russian oil rose to a record 1.92 million barrels per day in February, according to Kpler, as independent buyers snapped up heavily discounted cargoes after demand from India, a major buyer, declined.
State-owned companies suspended purchases of Russian oil from late October after the US imposed sanctions against major Russian oil companies — Rosneft and Lukoil.
However, the sharp rise in spot premiums and Brent prices above $100 a barrel temporarily complicates the work of independent refineries, three sources noted, as they are supplied with cheaper stocks of Russian and Iranian oil purchased before the war began.