* Deliveries to China to rise in Q3, trend to sustain in
* Russian supplies to northern Europe fall most because of
* European refiners have to pay hefty premiums for Russian
(Adds detail, analyst quote)
By Gleb Gorodyankin
MOSCOW, June 18 Russia is steeply ramping up oil
deliveries to China, with Asia now importing almost a fifth of
oil exports from the world's largest crude producer in a
strategic shift meant by the Kremlin to end reliance on weak and
saturated European markets.
Russia will increase oil supplies to China by 13 percent in
July-September from the previous three months, a shipping
schedule obtained by Reuters showed on Tuesday.
Together with supplies to the Pacific port of Kozmino,
Russia will export around 750,000 barrels per day to Asia, or 17
percent of its overall exports of 4.4 million bpd.
"Russia has been losing its interest in Europe where oil
consumption is stagnant. It's looking increasingly to the East,"
Valery Nesterov, analyst from Sberbank CIB, said.
The speed of changes in export patterns has aroused
widespread surprise as it took Russia only five years to
re-route huge volumes, previously destined for European markets.
Russia first started supplying China by railway and then by
a new pipeline while opening a Pacific port, Kozmino, in 2009.
The projects cost pipeline monopoly Transneft
dozens of billions of dollars and spurred criticism from some
private Russian producers who said they all had to pay higher
tariffs to Transneft so it could build the pipelines.
Private producers also said they benefited little from the
projects as the main volumes supplied to China came from state
oil major Rosneft.
The Kremlin oil major raised tens of billions of dollars
from Beijing by pre-selling its oil under long-term deals in
order to finance its growth and acquisition drive.
The shift in export route has also led to a gradual
strengthening of Russian oil prices for European consumers, who
had been used for decades to buying Russia's export blend Urals
at a steep discount to benchmark Brent prices.
Over the past few years, Urals has repeatedly traded at a
premium to Brent, including on Tuesday, as traders said Russian
supplies to Europe looked thin, especially to northern countries
from Russia's Baltic ports.
"That is a tight schedule for the Baltic again... It is
the Baltic which has to compensate for higher deliveries to
China," a trader with an oil major said.
Urals trading at a premium to Brent means refiners have to
pay heavily for the previously cheap oil, making life harder for
them at a time of small profits, known in the industry jargon as
"Next year and in 2015 it will get only tighter as supplies
to China are set to rise," the trader with a major said.
Rosneft agreed in March to triple supplies to China. It did
not specify over what period, but it plans to increase
deliveries by 800,000 tonnes this year on top of the 15 million
tonnes (300,000 barrels per day) it already supplies annually.
Traders expect the volumes for China to rise to 17 million
in 2014 and by 2015 they could amount to as much as 20 million
tonnes, on par with Germany, the top individual consumer of
Russian oil to date.
Urals crude exports via the Baltic Sea port of Primorsk are
set to fall by 7.4 percent compared with the second quarter to
14.7 million tonnes, the schedule showed.
Urals exports from the Baltic Sea port of Ust-Luga will
decline by 6.4 percent to 7 million tonnes, while shipments from
the Black Sea port of Novorossiisk will increase 3.4 percent to
9.95 million tonnes.
(Writing by Vladimir Soldatkin and Dmitry Zhdannikov; Editing
by Ruth Pitchford and Anthony Barker)