Russia has succeeded in redirecting its crude oil and fuel exports after the EU embargoes and the price cap set by the West, Russian Energy Minister Nikolai Shulginov said on Tuesday.
Russia hasn't reduced its sales of crude and petroleum products, the minister was quoted as saying by Russian news agency TASS.
"As far as sanctions are concerned, it is important to not only keep the production and refining volumes but exports, too, and thus the revenues for the federal budget," Shulginov was quoted as saying.
The minister had earlier confirmed that Russia's oil and gas production would drop in 2023 compared to 2022.
Earlier this month, Shulginov said that Russia expects its oil and gas production to fall this year compared to 2022, partly due to the production cuts announced for March.
"For 2023, we expect oil production levels to be slightly lower, also because of the voluntary reduction in output," Shulginov was quoted as saying by Russian news agency Interfax.
"Gas production volumes will continue to decline both due to the abandonment of the European market and the timing of the re-routing of energy flows to the East," the Russian energy minister added.
Tanker-tracking data compiled by Bloomberg showed this week that Russia's crude oil exports by sea have held above the 3 million barrels per day (bpd) mark in the past six weeks after the EU ban on fuel imports from Russia took effect and after Moscow said it would lower its production by 500,000 bpd.
Russia said last week it would continue its 500,000-bpd crude oil production cut through the end of June this year. Initially, Russia intended to cut that amount from its production in March.
"It remains to be seen if there will be sufficient appetite for Russian oil products now that the price cap is in place or if its production will start to fall under the weight of sanctions," the International Energy Agency (IEA) said in its Oil Market Report for March.
By Tsvetana Paraskova for Oilprice.com
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Comments
The proof is that in January 2023 its exports of crude and petroleum products hit 8.2 million barrels a day (mbd) or 2.5% higher than pre-Ukraine level of 8.0 mbd.
Moreover, its crude exports to China and India in February and March hit 3.56 mbd with China importing 1.94 mbd and India 1.62 mbd. If purchases of Turkey and other Asian countries and oil traders are added, total Russian crude exports would have exceeded 5.0 mbd. At least 35% of Russian crude exports to China were shipped via the Oil Siberia Pacific pipeline (ESPO) thereby bypassing any vessel or freight restrictions.
Russia’s LNG producer Novatek has been exporting its entire production of 32.6 million tons more than half of it went to the EU.
The bulk of Russian gas shipments are now going to China, India, Turkey and countries of the Asia-Pacific region. Russia and China have agreed details about building the Spirit of Siberia 2 gas pipeline via Mongolia which when completed by 2030 will carry 50 billion cubic metres (bcm) annually to China bringing total gas deliveries to China to 80 bcm annually according to Russian Deputy Prime Minister Alexander Novak.
Russian coal exports are continuing to reach both China and India in very significant volumes,
So when Russian Energy Minister Nikolai Shuginov said today that
Russia has succeeded in redirecting its crude oil and fuel exports after the EU embargoes and the price cap set by the West, he was telling the truth. He also confirmed that revenues for the Federal budget haven’t diminished.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert