June 5, 2023

Unique: Russian oil was transported to Asia by Chinese supertankers amid a shortage of vessels

  • The G7 price ceiling limits the ships available to Russia
  • Western companies avoid Russian oil trade because of sanctions
  • Crude oil sales in Russia’s trade to Asia below the limit
  • Russia and China started a “no-limit partnership” in 2022

NEW DELHI/SINGAPORE, Jan 13 (Reuters) – At least four Chinese supertankers are carrying Russian Urals oil to China, according to trade sources and monitoring data, as Moscow looks for ships to export as the G7 oil price cap curbs the use of Western cargo services and insurance.

China, the world’s largest oil importer, has continued to buy Russian oil despite Western sanctions since Russian President Vladimir Putin and Chinese leader Xi Jinping launched a no-limit partnership before the war in Ukraine.

Sources said a fifth supertanker, or very large crude carrier (VLCC), delivered crude to India, which, like China, has continued to buy Russian oil at a discount as many Western buyers turn to other suppliers.

According to sources and Eikon ship tracking data, all five shipments were scheduled between December 22nd and January 23rd.

The G7 price cap introduced in December allows non-EU countries to import shipments of Russian oil by sea, but prohibits shipping companies, insurance and reinsurance companies from handling Russian crude unless they are sold below the $60 price cap.

“With Ural prices well below the price ceiling, buying and trading Urals is essentially legal,” said a director of a Chinese company involved in the deliveries.

As the United States and its allies sought to choke off Moscow’s energy revenues to limit its ability to finance the war in Ukraine, Russia quickly diverted oil exports from Europe last year, mostly to Asia.

Longer voyages, deep discounts and record freight rates ate into profits, but the use of supertankers on Asian routes may now cut shipping costs.

Russia’s energy and transport ministries declined to comment. China’s foreign ministry did not respond to a request for comment, although Beijing has previously called Western sanctions against Russia illegal.

Indian Oil Minister Hardeep Singh Puri said at a press conference on Thursday that India would buy oil from where it could get the cheapest price.

Industry sources say Indian refiners are securing a discount of $15-$20 per barrel for Russian oil compared to Brent.

RUSSIA TURNS TO ASIA

Russia is sending Ural from western ports to transship the supertankers Lauren II, Monica S, Catalina 7 and Natalina 7, all Panamanian-flagged vessels bound for China, while Sao Paulo is already closing in on India, according to three trade sources and Eikon. .

Based on Eikon data and public shipping databases, Lauren II is managed by Greetee Co Ltd of China and owned by Maisie Ltd of China, Catalina 7 is owned by Canes Venatici Ltd of Hong Kong and Natalina 7 is owned by Astrid Menks Ltd of Hong Kong and both are managed by Runne of China. Co Ltd, while Monica S is owned by China’s Gabrielle Ltd and managed by Derecttor Co Ltd. Sao Paulo is owned and managed by the Cypriot company Rotimo Holdings Ltd.

Reuters could not immediately contact the owners and managers because they were not publicly known.

The management of the Chinese company involved in the transports estimates that a total of 18 Chinese supertankers and another 16 Aframax-sized vessels could be used to transport Russian crude oil in 2023, which is enough to transport 15 million tons per year, or about 10% of the Urals’ total exports. .

A VLCC can carry up to 2 million barrels, a Suezmax vessel up to one million barrels and an Aframax up to 0.6 million barrels.

Although most Russian crude is now bound for China, India and Turkey on Russian or non-Western vessels, G7 sanctions have left Russia in need of a shortage of smaller ice-class tankers, many of which are owned by Greek and Norwegian companies. Baltic sea ports in winter.

Russia and China do not have large fleets of ice-class vessels, and the use of Chinese VLCCs frees them to travel from Baltic Sea ports to carry out ship-to-ship transfers to larger tankers in international waters, traders said.

This practice was reflected in Eikon tracking data, including in international waters of the Mediterranean, and management highlighted operations near Ceuta, an autonomous Spanish city on the north coast of Africa, and Greece’s Kalamata, a city on the Peloponnese peninsula in southern Greece.

“It’s extremely expensive and it doesn’t make sense to use ice-class tankers for long distances,” explained one European market trader as to why VLCCs were used.

Another trader said the war in Ukraine and sanctions have boosted demand for small tankers and lowered prices for large vessels, helping to reduce additional costs for Russia.

Reporting by Nidhi Verma and Chen Aizhu; Editing by Kirsten Donovan and Edmund Blair

Our standard: Thomson Reuters Trust Principles.

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