The Russian Federation uses “shady” methods to supply its oil products to the market to circumvent sanctions
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Russian sellers of naphtha, a petroleum product used to make plastics and in petrochemicals, label it as gasoline or ship it from ports without a destination to keep exports going despite the sanctions.
It is reported Bloomberg with reference to FGE and Kpler analysts, as well as own sources.
Currently, there is no clear market for Russian liquefied petroleum gas, as its main buyers – South Korea and Europe – cannot receive it directly after the sanctions were introduced, explains Arman Ashraf, head of the liquid hydrocarbons department at the FGE consulting company.
Although China and India consume a lot, both countries have sufficient domestic reserves, and South Korea, which was a key consumer before the Russian Federation’s full-scale invasion of Ukraine.
In March, Russia shipped about 1.34 million tons of liquefied petroleum gas – almost the same as last year. But the question remains whether these volumes will remain in the coming months.
Currently, Russian gasoline is sent to storage facilities in the United Arab Emirates and West Africa, which used to be rare. “It could be kerosene or maybe even gasoline with a lot of kerosene,” Ashraf suggests.
The reason for this mixing is that the price ceiling for naphtha is much lower than the ceiling for diesel – $45 versus $100 per barrel.
This may indicate attempts to hide the origin of Russian oil, as well as difficulties in finding buyers. Before the introduction of sanctions, almost all cargo had a destination, but in March this share increased to almost a quarter of exports.
Also, the Russian Federation resorted to “redocumentation”, or mixing its own oil products with non-Russian ones in such trading centers as Singapore and the UAE. This practice gained momentum after the war and shows no sign of abating after the sanctions.
According to Kpler, the volume of oil shipped from Russia to Singapore almost quadrupled to 164,000 tons in March compared to last year. Cargo flow from the UAE jumped to 156,000 tons from zero.
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