HomeMediaLatest NewsOn the difficulties in redirecting oil exports to Asia

On the difficulties in redirecting oil exports to Asia

13 April 2022

Salikhov Marcel R. President, Principal Director on Economic Studies, Head of the Economic Department

Marcel Salikhov, President of the Institute for energy and Finance commented to the Prime news agency about the possibility of reorienting Russian oil exports.

Russia will inevitably face a number of difficulties when redirecting the export of oil and petroleum products from the European market to the Asia-Pacific region (APR), Marcel Salikhov shared his opinion with RIA Novosti.

"When supply flows change, inevitable difficulties will arise due to the limited capacity of the ESPO (Eastern Siberia-Pacific Ocean pipeline system - ed.) and a significant increase in the cost of freight when transporting from ports in the European part of Russia. Redirecting Russian oil supplies from Europe to the Asia-Pacific Region will lead to a doubling of the average delivery time, which will increase the need for tankers," Salikhov said.

"Redirecting export deliveries of Russian oil products to Asian markets is much more difficult to solve, since most Russian refineries are located in the European part of Russia, and key oil product pipelines are aimed at the European market," he added.


According to Salikhov, in January-February, the export of crude oil from Russia amounted to about 5 million barrels per day, of which about 2.5 million accounted for Europe. At the same time, 0.7-0.8 million barrels per day of oil goes through the Druzhba main pipeline system, through which supplies cannot be physically redirected to other regions, the expert notes.

“Thus, about half of Russia’s crude oil exports go to Europe. Russia’s share in European crude oil imports is about 25%. Including oil products, Russia’s share in European oil and oil products imports is about 30%,” he says.

At the same time, China is the main consumer, to which Russia can theoretically redirect volumes of liquid hydrocarbons from the markets of Europe and the USA. “From the point of view of quality characteristics, Russian oil is well suited for Chinese refineries and is theoretically capable of displacing up to 3 million barrels per day of medium-sulphurous oil of similar quality imported by China from other countries,” the expert notes.

Another alternative, Salikhov says, is India, which in March already increased purchases of Russian oil at a discount and on CIF delivery terms, according to which the seller pays for the delivery of goods to the port, insurance, loading and freight of the vessel. It is also expected to conduct mutual settlements between the two countries in national currencies.


According to Salikhov, however, it is hardly advisable to solve logistical problems by building new oil pipelines in the event of a reorientation of exports from West to East, since this will take a long time.

"At present, it is more expedient to expand our own tanker fleet and expand the capacities of ports. In the future, more active use of the Northern Sea Route to supply oil to Asian buyers is possible," he believes.

Insufficient number of tankers is a problem for export reconfiguration. “The Russian fleet is able to independently provide only 33% of the sea transportation of Russian oil and oil products. Russian tankers are more suitable for transporting crude oil, and for oil products, it can only transport 17% of their total exports,” Salikhov concludes.
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