In unusual move, India receives Arctic oil from Russia

Singapore/New Delhi:

Russia is sending more crude produced in the Arctic region to China and India, and heavily discounted after Europe closed its doors on Russian supplies last month, trade sources and data show.

Arctic grades Arco, Arco/Novi Port and Varande don’t normally go east, but now the EU, G7 countries and Australia have new ones after introducing a price cap on Russian oil in December on top of the EU embargo. Looking for houses. Raw by sea. Sellers are selling Russian crude at deep discounts as they absorb higher shipping costs.

“All this Arctic crude usually goes to the EU, but now it has to go somewhere else,” said a Singaporean trader.

Refinitiv data showed Arctic crude exports to India rose steadily from May, with a record 6.67 million barrels in November and 4.1 million barrels in December. Most of the supplies produced in the fields operated by Gazprom Neft were Arko and Arko/Novi ports.

Arko crude is a heavy sour grade from the Prerazlomnoye field, while the superior quality Novy Port grade from the Novoportovskoye field is a medium to light sweet crude.

Last week, India imported its first Varandey crude cargo, which was loaded at the port of Murmansk in late November, according to data from two sources and Refinitiv.

The 900,000-barrel cargo onboard tanker Bear Alcor that sailed through Europe, the Mediterranean and the Suez Canal for refiner Bharat Petroleum Corp Ltd was offloaded at the Cochin port in Kerala on December 27. The other two were 600,000-barrel cargoes that were loaded in November. Discharged in Rotterdam in the Netherlands. It was not clear which companies bought these cargoes.

One of the sources in an Indian refiner said that Russia also has a good amount of other grades, which are being offered to Indian buyers.

Gross product margins on a delivered basis from processing grades such as Arco and Novi Port are $10 a barrel higher than similar quality U.S. crudes such as Mars and West Texas Intermediate, he said.

Bharat Petroleum did not respond to a request for comments.

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Varande crude, produced from the Timan-Pechora oil fields operated by Lukoil, has an API gravity of about 37 °C and contains 0.4% sulfur. Its quality is similar to that of ESPO Blend, a Far East grade favored by China’s independent refineries, known as Teapot.

The second source said Varande crude is easy for Indian refiners to process, though future purchases will depend on price levels.

“Now India and China are their major homes,” he said.

Refinitiv data shows that at least three oil tankers loading Arctic crude in the port of Murmansk are now headed to China.

One of the tankers, the Nikolay Zuev, carrying about 780,000 barrels of crude, is expected to arrive on January 18 but still has no specific destination. The other two tankers – NS Bravo and Gladiator – each carrying around 900,000 barrels of crude oil – are expected to reach China’s eastern city of Qingdao on February 3 and 15 respectively, the data showed.

Refinitiv listed the grade carried by these vessels as Arco crude, although a Chinese trader said there could be Varande crude onboard. It was not clear which refiner bought the cargo.

Another trader said Arco crude was offered to Chinese buyers on a delivered ex-ship basis at $9 a barrel below ICE Brent, but it was not clear at what price the deals were concluded.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)