Russian Oil Shift East Accelerates, Dictated by Politics


MOSCOW, Oct 13 (Reuters) – Russia is diverting more of its crude oil east with deliveries to China hitting a new record last month at the expense of Europe as geopolitical tensions between Moscow and the West dictate the latest shift in flows.

As Russia's relations with the West deteriorated over the Ukraine crisis, the European Union and United States imposed wide-ranging sanctions on Russian firms, including oil and gas producers, leaving Moscow trying to forge closer ties with energy-hungry China.

Russia's energy ministry says crude oil supplies to China surged in January-September by almost 45 percent year-on-year, to 16.8 million tonnes (450,000 barrels per day), while shipments from the Baltic Sea port of Primorsk plunged almost 20 percent to 33 million tonnes.

Oil product exports to Europe have been rising and plans for state-owned monopoly Transneft to use crude oil pipelines for exports of diesel show the trend will likely continue.

The decline in Russian crude oil exports comes as increasing volumes of crude oil are being processed at domestic refineries, reaching a post-Soviet high of almost 6 million tonnes in August as plants undergo a huge $55 billion modernisation programme.

"Much greater changes can be seen in the geographical distribution of these shrinking exports, with flows to the West clearly losing out against prioritised links to the Far East -- a trend that could easily be accelerated further in the current political climate," JBC Energy consultancy said in a note.

Russia pumps more than 10 million barrels of oil a day, but most of its exports are sold in either the Mediterranean or northwest Europe at a discount to the benchmark Brent blend, which has long irked the cash-hungry Kremlin.


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