| NEW YORK, March 13
NEW YORK, March 13 A test sale from the U.S.
emergency oil reserve on Friday may or may not be a subtle
warning to Russia, but it will have little effect on U.S.
imports from the world's biggest producer, which will likely
slow to a trickle this year.
The Department of Energy will take bids later on Friday to
sell 5 million barrels of sour crude from the nation's Strategic
Petroleum Reserves, to be released from salt dome caverns in
Texas and Louisiana.
But the sale is unlikely to displace already shrinking
Russian crude imports, which have significantly changed in
variety and geography over the past few years.
Four years ago, Gulf Coast refiners imported as much as
177,000 barrels-per-day (bpd) of Urals sour blend crude from
Russia's Black Sea or Baltic ports. Now, however, most Russian
barrels are light sweet ESPO or Sokol grades that cross the
Pacific Ocean from Siberia to West Coast refineries.
Even those are quickly losing ground as cheap crude from
U.S. shale plays, such as North Dakota's Bakken, squeeze out
more foreign oil.
Imports from Russia stood at 16.3 million barrels in 2013,
making it the 13th largest supplier, according to data from the
U.S. Energy Information Administration (EIA). That was
equivalent to 2 percent of the volumes imported from Canada, the
largest oil exporter to the United States.
The Bakken shipments "will keep imports to a minimum"
although the threat of rising rail costs due to tougher
regulations may still keep some barrels flowing, said Al Troner,
president of Asia Pacific Energy Consulting (APEC).
"I don't think they will abandon Russian imports altogether
- no refiner wants to completely cut off slate alternatives."
Russia remains the world's top oil-producing nation with
10.58 million barrels-per-day of output in February, according
to BP Statistics. But a growing share of that is now headed to
China and other countries in Asia, where demand is rising.
There is yet no indication that Russia may seek to use its
oil exports as a lever in the intensifying dispute with Europe
and the United States over Crimea. Yet, the SPR release can
serve as a reminder that shale oil fields are changing the
balance of global petro-power.
"The U.S. is there to dampen any effects via SPR releases,"
a trader with a Western firm said. "There's no way they would
fight. It's all sabre-rattling."
FROM BAKKEN WITH LOVE
The two biggest importers of Russian crude, Tesoro Corp.
and BP Plc., have been weaning themselves off by
sourcing more oil from the prolific Bakken shale of North
Dakota. Those flows are only set to grow.
Tesoro, which accounted for nearly half of all Russian crude
imports last year, is working with Savage Services to develop a
360,000 bpd rail offloading terminal at the U.S. Port of
Vancouver, the largest of a handful of projects designed to
deliver North Dakota oil up and down the coast.
Tesoro imported about 20,000 bpd of Russian oil last year,
half of that to its refineries near Los Angeles, California, the
EIA data show. That's just one-third as much as it bought in
2012, when it shipped a large bulk of its imports, some 20,000
bpd, to its refinery in Anacortes, Washington. That refinery is
now taking in some 50,000 bpd of Bakken by rail.
Even with the $7-a-barrel cost to ship North Dakota crude by
rail to Washington, Bakken still costs just under $100 a barrel
at Thursday's prices. ESPO Blend, by contrast, runs nearly $110
a barrel before shipping costs.
"As a matter of longstanding policy, we do not discuss
specific details related to our crude movements or crude
slates," Tesoro spokeswoman Elizabeth Watters said in an email.
Some of the decline was likely caused by Tesoro's sale of
its 94,000 bpd Ewa Beach (Kapolei) refinery in Hawaii to Par
Petroleum, which is supplied through a deal with UK bank
Barclays. The bank bought 1.45 million barrels of
Russian light sweet and sour oil for the refinery in the last
two months of 2013, the EIA data show.
Barclays declined to comment on its supply deal.
BP Plc, the second largest importer of Russian oil in
2013, received a total of 3.2 million barrels last year, more
than half of which went to its Cherry Point, Washington
refinery. That may fall further since BP began receiving nearly
60,000 railed Bakken crude at the plant in December.
Sources close to BP's operations said the company's Russian
imports declined after it sold its California plant to Tesoro in
2013. Tesoro integrated the 266,000 bpd Carson, California,
refinery with its adjacent Wilmington plant.
The third largest importer of Russian crude last year, Citgo
Petroleum , stands out because it does not have a
West Coast refinery. Citgo imported 1.6 million barrels of
mostly light sour Russian crude to its Gulf Coast refineries in
Texas and Louisiana, EIA data shows.
The company did not respond to repeated requests for