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Russia’s state-controlled oil giant Rosneft has failed to place 6.5 million barrels of various Russian crude blends loading in May and June after demanding rubles and 100-percent pre-payment from buyers, Reuters reported on Monday, citing five traders with knowledge of the tender process.
There were no bidders for Urals, Siberian Light, Sokol, and ESPO crudes that Rosneft was trying to sell. Not even Indian state refiners bid to buy that oil because of “one-sided” terms of the tender, two of the sources told Reuters.
Buyers have found it very difficult to meet the terms of the tender, considering that the Russian state oil giant wanted payments converted in rubles and 100-percent pre-payment, the traders who spoke to Reuters said.
Even without those terms, buyers in Europe wouldn’t have bid for Russian cargoes anyway, according to the traders, as many are shunning Russian crude because of ethics or expectations that a potential oil embargo on Russia could make its crude even more toxic than it is now.
Still, some of the 6.5 million barrels on offer could be sold by Rosneft in private deals via talks with individual potential customers.
Rosneft’s main objective in the tender was to announce the requirement of ruble payments to the market, and this was achieved, a source with knowledge of the tender told Reuters.
Last week, reports emerged that Rosneft was offering as many as 37.4 million barrels of the flagship Urals crude for May and June loadings, according to a tender document seen by Bloomberg. Rosneft has said it prefers Russian rubles as payment, although in theory, buyers could pay in U.S. dollars, euros, yuans, the UAE’s dirham, or Turkish lira, according to the document seen by Bloomberg. Rosneft also wants 100-percent pre-payment on the provisional value of the Urals cargoes.
All these stipulations from Rosneft in the firesale tender suggest that Russia and its oil giant are looking to get paid and get the crude sold before a potential EU ban on Russian oil imports.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.