The struggling global supply chain…
Despite oil prices sitting well…
Russia needs strategic oil storage facilities to help its oil industry and oil trade with the Western sanctions, Russian experts and industry officials say.
“As of today, it is necessary, based on Soviet and world experience, to consider the possibility of creating oil reservoirs with a volume of about 140 million tons and similar ones for petroleum products,” according to an English translation by Interfax of an article by Gennady Shmal, head of the Union of Oil and Gas Producers, and Rishat Shagislamov, project director of a department at the Russian energy ministry.
“In terms of organization and technologically, this should be a distributed system tied to transport infrastructure and using the method of storage in rock salt deposits,” the Russian industry experts say.
Lack of oil storage was a big hurdle to Russia’s oil exports in the first weeks after the Russian invasion of Ukraine, when buyers started shunning Russian crude and products, uncertain how the West would react with sanctions on Russian oil. As a result, Russia had to curtail production, and this is always a risk because some wells and reservoirs may never be restarted again.
“The absence of a system of liquid hydrocarbon storage facilities seems to be a serious strategic omission of the domestic oil and gas complex,” the Russian experts admit in the article carried by Interfax.
Officials said in April that Russia was working to build such oil storage facilities as it now looks to the East for willing buyers.
Russian oil production and exports have been holding resilient in recent months, with much smaller declines than initially expected, the International Energy Agency (IEA) said last week in its monthly report. But the agency’s report warned of a 20% drop in Russia’s production if its oil doesn’t find a home with Asian buyers when the EU embargo takes full effect in February 2023.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com