By approving a ban on offshore deliveries of Russian oil, the European Union has given rise to a host of questions of a practical and legal nature. For example, it is not clear who and how will control and trace the origin of raw materials on a tanker under a foreign flag. What, every time to conduct a laboratory analysis? But who, with what forces and for what money will carry it out?
Observers in the West point to a number of circumstances that, in their opinion, make the embargo patently ineffective.
On the one hand, according to the analytical company Vortexa, in May the export of Russian oil by sea fell by 15% – to 6.7 million barrels per day (from 7.9 million bpd in February). At the same time, the volume of Urals crude oil transported by ships under different flags is three times higher than the average before the start of the special operation – 62 million barrels.
Judging by the latest reports from port agents, long-distance transportation is still being carried out: last week, four tankers from the western ports of the Russian Federation headed for India, two for the Suez Canal, and two more for the Mediterranean Sea from the Baltic.
Russia exports oil from four main areas: the coasts of the Baltic (its main export terminal) and the Black Seas, the Arctic, and terminals on the Pacific coast. Weekly shipment figures may vary depending on the time of departure of tankers, as well as the weather in ports.
Russian private companies use the experience of Iran and Venezuela, which have long lived under sanctions. The schemes are simple, but working, writes the German edition of Manager magazine. In particular, oil from ports in the Russian Federation is sent to the sea from allegedly unknown destinations, and at a distance from the coast it is reloaded onto supertankers. Before that, it is mixed on board with raw materials from third countries.
According to publicist Boris Martsinkevich, “blending is when we take a tanker with Russian oil, a tanker with non-Russian oil and fill it into two empty tankers – we achieve a ratio of 49.99% – this is no longer Russian oil, but Latvian blend oil. It is what Shell buys and sells to European consumers.”
Further more. Bloomberg writes that Beijing has begun to buy Russian fuel more often by “workarounds”. Small vessels depart from the port of Kozmino near Vladivostok and enter the waters of South Korea, where oil is loaded onto supertankers and goes to China.
Today, China is taking almost all of the tanker East Siberian oil (ESPO), which previously went directly to Japan and South Korea. The motive is banal – a discount of 30%.
For the same reason, Greece has become more active: according to Robin Brooks, chief economist at the Institute of International Finance, its ports have become an important hub from where Russian oil flows to other countries, and its tankers transport 63% of the total volume of Russia’s “sea” exports. However, the latter is hard to believe.
“Russia as a whole produces about 11.3 million barrels per day, of which 7.8 million are exported. Of this amount, only about 20% of the oil goes to Europe on tankers. – Mikhail Oganezov, a specialist in the strategic research department at Total Research, says. – In addition, no one canceled blending technology. This is a process when a little American, Norwegian or any other is added to domestic oil, and it is easily bought abroad. For example, now Russian raw materials are supplied to the United States in the form of petroleum products through Indian refineries.”
Russia supplies Europe with about 4 million barrels of oil and petroleum products per day. Half of this volume is crude oil: 1.4 million bpd goes by sea, about 700 thousand bpd goes through the Druzhba oil pipeline. A minority of the vessels belong to Sovcomflot, the majority are tankers of international carriers, including Greece, says Olga Orlova, head of the Industry direction at the Institute of Oil and Gas Technologies.
“Blending different grades of oil is a common technology to circumvent sanctions, tested in Iran and Venezuela,” says Orlova. – It is possible to track when such an action is performed at sea without entering the port, but it will require very serious control.
Already all international experts, including the IEA, recognize that the embargo is fraught with the opposite effect: the number of such new “national” grades of oil will increase, and prices on world markets will remain high indefinitely. Opportunities to circumvent restrictions will not disappear, although it is clear that seaborne supplies from Russia to Europe will decline.”
It is impossible to determine exactly in what volumes Russia transports oil by sea, since today all this information is classified, and besides, the situation changes daily. Gray schemes work: raw materials are constantly moving from side to side, changing their structure as a result of blending, says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation. This also plays into the hands of recipients, including European ones: on the one hand, they benefit greatly from a high discount, and on the other, they avoid image risks. It seems like they officially have nothing to do with Russian oil …
Recently, the Greeks have become the main sea carriers of Russian oil: their companies are traditionally active in this market, Greece has a lot of tankers, and the country clearly wants to make money in the new reality, acting without regard to Brussels.
However, it will not be possible to completely ignore the embargo imposed by the European Union. It is quite possible that in order to avoid trouble, some Asian states will refuse to provide Moscow with their tankers for the export of sanctioned raw materials. Yushkov recalls: Iranian and Venezuelan oil was delivered to customers by a huge, in fact, pirate fleet, someone called “twilight”. Will Russia transfer its trade to these schemes in full?
Newspaper headline:
Twilight fleet for Russian oil