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Russian crude oil exports to India since the start of the year have topped 1 million tons (7.3 million barrels) and will in all likelihood continue to rise further, traders told Reuters and shipping data confirmed the information.
Until 2017, Russian Urals exports to India averaged 500,000 tons annually, or 3.6 million barrels, but now that the OPEC producers that used to supply more crude to India—chiefly Saudi Arabia and Iraq—are shrinking exports as part of compliance with the multilateral production cut agreement, Russian producers are swooping in to rake in their market share.
Russia is also benefiting from growing tension between Iran and India: the two are arguing about the development of the Farzad-B gas field. The row began earlier this year when the Indian government accused Tehran of delaying the go-ahead of the field’s development by the Indian company that discovered the reserves, ONGC Videsh.
According to the Indian side, the Iranians were waiting to see if someone else would offer more money for the field’s development. The initial US$3-billion investment plan was revised to US$5 billion, but Iran is still taking its time to award the concession to the all-Indian consortium led by ONGC. As a result, Indian oil importers have warned they will cut their imports from Iran by a quarter. This means toe current daily average of 510,000 bpd will be reduced to 370,000 bpd.
At the same time, however, Russia’s ESPO blend exports are set for a decline, according to loading data as quoted by S&P Platts. June deliveries of the Siberian blend will be 17.2 percent lower than deliveries in May, at 2.4 million tons (17.6 million barrels). The May deliveries of the blend that is shipped via the East Siberian-Pacific pipeline totaled 2.9 million tons, or 21.3 million barrels.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.