Transit boost for Siberian Light

Siberian Light exports from Novorossiysk on the Black Sea are on course to be 8.5pc higher than a year earlier at 3.64mn t (111,000 b/d) in January-August.

Total loadings of the grade are 22pc lower than in the same period in 2019, with the volume of Russian crude in the Siberian Light stream down by 71pc against 2019 — and nearly a third lower so far this year (see table). Producers have slashed Siberian Light loadings to meet higher domestic demand for light crude — supply to Russian refineries rose by 1.3pc on the year to 47mn t in January-July.

But transit shipments of light crude from central Asia through Novorossiysk have risen sharply in January-August — by more than a quarter against 2020 and by almost a third compared with 2019 — driven by Azeri and Kazakh deliveries.

Turkmenistan remains by far the biggest contributor to Siberian Light — accounting for around 35pc of exports in January-August — although shipments of 1.3mn t were down by 12pc on the year. Light sweet Cheleken and Kiyanly Blend are delivered by tanker to Russia's Caspian port of Makhachkala for onward delivery to Novorossiysk through the Transneft pipeline system. Trading company Vitol is handling all Turkmen transit crude this year.

Siberian Light has traded at an average 45¢/bl discount to benchmark North Sea Dated crude this year, against an average 33¢/bl premium in January-August last year, which may have encouraged higher shipments from Kazakhstan. Light sour CPC Blend, the alternative export stream for Kazakh light crude, has traded at a significantly deeper average discount of $1.82/bl this year, and exports through Novorossiysk were nearly 50pc higher on the year in January-August.

A surge in Azeri crude deliveries to the Russian port so far this year is the result of much lower than usual shipments last year. State-owned Socar suspended shipments along the Baku-Novorossiysk pipeline in January 2020 and flows resumed only in mid-July, once a new agreement with Transneft had been reached — Azeri exports were more than halved on the year in January-August 2020.

Of Russia's Siberian Light exporters, only Lukoil upped supplies in the first eight months of 2021 — almost doubling shipments to 480,000t. Russneft has cut exports by 41pc on the year, while Gazpromneft and Novatek suspended loadings.

Staying local

Italy, Romania and Turkey remain the top three destinations for Siberian Light this year, but China has dropped from the list — all exports of the grade have remained in the Black Sea and Mediterranean markets. Shipments to China peaked at 380,000t in April last year, after oil demand and prices slumped. Chinese importers took the opportunity to build stocks when Siberian Light was trading at a record deep $5.50/bl discount to North Sea Dated.

Deliveries to Turkey rose by 20pc on the year, with 92pc of the total taken by state-owned refiner Tupras for its 200,000 b/d Izmit and 113,000 b/d Kirikkale refineries. And supply to Lukoil's 160,000 b/d Burgas refinery in Bulgaria doubled.

Siberian Light exports to Romania jumped by 70pc on the year in January-August. Just under half was for the 100,000 b/d Midia refinery controlled by Kazakh state-owned Kazmunaigaz (KMG), steady against a year earlier — KMG has loaded around 80,000 t/month of Siberian Light this year, traders say. But combined deliveries to Constanta for the 84,000 b/d Petrobrazi and 50,000 b/d Petrotel refineries rose sharply, to 565,000t from just 125,000t a year earlier.

Shipments to Italy were 6.4pc higher on the year in January-August, with deliveries to the port of Trieste accounting for more than 80pc of the total. From Trieste, crude flows through the 900,000 b/d Transalpine Pipeline system to refineries in Germany, Austria and the Czech Republic.