Argus reported a slowdown in the shipment of ESPO grade from Kozmino

Our approach to investment projects is based on long-term strategic cooperation and development of companies through the provision of financial resources, as well as participation in management decisions.
21 August 2020

as the Agency informed in a new study (provided to the editorial Board), supply Growth slowed due to a reduction in production in Russia within the framework of OPEC+. The decrease in the supply of ESPO mix did not significantly support the cost of the variety. The volume of deliveries from Kozmino for the first nine months will increase by only 1.2 thousand barrels per day (195 thousand tons) compared to the same period last year, to 671 thousand barrels per day (24.8 million tons), according to preliminary data from Argus.

Previously, ESPO shipments were forecast to exceed 34 million tons by the end of 2020 (800 thousand tons more than in 2019). However, the reduction in production under the OPEC+ deal leads to a reduction in the supply of the variety in the third quarter by 1.3 million tons compared to April-June 2020, to 7.64 million tons. The main decline, according to Argus ' conclusions, will fall on Rosneft — the company will reduce shipments by 1.1 million tons compared to the previous quarter, to 2 million tons during the current quarter. While in the first half of this year, VINK shipped about 1 million tons per month from Kozmino. In the context of declining production at fields in Eastern Siberia under the OPEC+ agreement, the largest Russian oil company is forced to reduce shipments from Kozmino in order to fulfill its obligations to supply China with a branch from Skovorodino (Amur region) under an intergovernmental agreement. According to forecasts, Rosneft's shipments in the fourth quarter of 2020 may grow to 900 thousand tons per month from 600-700 thousand tons per month in July-September of this year. 

According to the Agency, under the OPEC+ agreement, Concept Oil will also reduce total shipments of non-tanker volumes of ESPO mix by 600 thousand tons in the third quarter of 2020 compared to the second quarter, to 1.9 million tons. The intermediary purchases non — tanker volumes for the formation of tanker lots and sells them to the partner-Paramount Energy. The main volumes of Concept Oil are purchased from the resources of Irkutsk oil company (INC), RNG, Gazprom Neft and Yargeo, a joint venture of NOVATEK and the Energia Fund of former Russian energy Minister Igor Yusufov. 

At the same time, Surgutneftegaz, which sells the entire volume on the spot market, will increase deliveries by 100 thousand tons relative to the second quarter, to 2.5 million tons. This year, the company increased shipments to 800 thousand tons per month compared to 700-800 thousand tons per month in 2019.LUKOIL will double shipments from Kozmino in the current quarter — by 300 thousand tons compared to April — June, to 600 thousand tons. due to lower exports by other suppliers, the company was able to increase shipments to 200 thousand tons per month in the third quarter compared to 100 thousand tons per month in the first half of the year. The manufacturer sells raw materials on the spot market through its own trading division Litasco. 

According to Argus, shipments of raw materials by Gazprom Neft in the third quarter will remain at the level of the previous quarter — 640 thousand tons. VINK in the first two summer months of 2020 was able to ship two batches of 140 thousand tons each. Gazprom Neft sells tanker batches on the spot market through its own trading division Gazprom Neft Trading. In addition, the company sells non-tanker volumes of ESPO mix in combined batches to the trading company Concept Oil. During the first half of this year, such shipments amounted to almost 100 thousand. tons per month compared to about 80 thousand tons per month — last year. 

In the first seven months of 2020, China's share in purchases of ESPO marine batches increased by 6% compared to the previous year, to 81.5%. Deliveries to the country increased by 1.83 million tons to 16.19 million tons. However, according to Argus forecasts, demand for batches of the variety with delivery in August-September may decrease, market participants do not exclude. The main flow of ESPO goes to Shandong province, where most of the factories of independent processors are located. As a result of the growth in imports of sea shipments to China in June to a record 13 million barrels per day, queues for unloading formed in the ports of the province. Many independent refiners in this region began to reduce plant utilization following a decrease in processing margins in June-July due to an excess of oil and petroleum products reserves. Interruptions in unloading are expected to last until the beginning of September. 

Shipments of the variety to South Korea in January-July 2020 increased by 680 thousand tons, to 1.98 million tons. Some of the oil that goes to this country is stored in port storage facilities, from where it is sent in small batches to independent Chinese refiners. ESPO deliveries to the Philippines resumed, where 300 thousand tons were shipped within seven months of this year. last year, a similar volume was sent to the country in October-December 2020.;

At the same time, Japan reduced ESPO purchases by 495 thousand tons, to 805 thousand tons. the country's share in total exports of the variety decreased by 3%, to 4%. The low level of processing due to the coronavirus pandemic contributed to a decrease in shipments of the variety to Japan. As a result, Japanese refineries loaded about 60% of their installed capacity in June-July, or 2.1 million barrels per day, amid high oil reserves. A year earlier, the indicator was at the level of 87%, or 3.1 million barrels per day. 

Deliveries to Malaysia decreased by 400 thousand tons compared to the same period last year, to 300 thousand tons, and to New Zealand — by 100 thousand tons, to 300 thousand tons. shipments of ESPO mix to the United States, Singapore and Thailand were suspended. In January-July last year, 540 thousand tons were sent to Singapore, 300 thousand tons to Thailand, and 200 thousand tons to the United States. 

Exports in other directions, according to Argus, have changed slightly. 

The average cost of ESPO spot shipments in the third quarter increased to a premium of $ 2.54 per barrel (fob Kozmino) to Dubai grade swap contracts, compared to a discount of 0.35 per barrel (in the second quarter). The cost of the variety was supported by a reduction in exports of competing middle Eastern varieties within the framework of OPEC+. In addition, the loading of refineries in China in June-July of this year reached a record 14 million barrels per day amid a recovery in demand for petroleum products. Major Chinese refiners also bought large volumes of raw materials on the spot market for delivery in the third quarter, fearing a decline in oil supplies under long-term contracts due to OPEC+restrictions. 

ESPO blend shipments in July rose to an average premium of $ 2.99 per barrel (fob Kozmino) to Dubai-grade swap contracts, compared with a record discount of $ 4.13 per barrel in June. August ESPO shipments were sold even more expensive — at a premium of $ 3.53 per barrel. Nevertheless, the average premium level for shipments for September delivery fell to $ 1.39 per barrel. The variety fell in price amid weakening demand in China in the face of high stocks of raw materials in local storage, as well as queues at ports for unloading and severe flooding in the South of the country. 

Вернуться к списку