MOSCOW (Reuters) - Seaborne exports of Russia’s flagship Urals crude will fall in 2018 to their lowest since the early 2000s as Moscow diverts oil from the West to East and boosts supplies to China, plans by Russian pipeline monopoly Transneft showed on Friday.
Russia has been pursuing closer ties with Asian countries, primarily top energy consumer China, amid chilling relations with the West over Moscow’s role in Ukraine crisis and accusations of meddling in foreign elections.
Russia denies allegations that it has interfered in elections including the 2016 presidential vote in the United States.
Nikolai Tokarev, the head of Transneft and close ally of President Vladimir Putin, said the Asian markets are more attractive because of better profitability.
“You know how profitable the Asia Pacific market is. And it looks right that we are focused on this market and the oil producers are interested in going this way,” he told reporters.
Urals prices have already strengthened on sparse supply. Its discount to dated Brent narrowed to an average of about $1 a barrel in 2017, Reuters data shows.
The biggest reduction for Russia’s key export blend, Urals, will be at Baltic Sea ports. Loadings from Primorsk and Ust-Luga are planned at 62 million tonnes for 2018, down by 14.7 million tonnes from last year.
Urals and Siberian Light loadings from Black Sea’s Novorossiisk are planned at 27 million tonnes, according to Transneft. That is 3.7 million tonnes lower than in 2017 and the lowest level since 1999, Reuters data shows.
Urals exports are seen drying up as Russia increases supplies to China under the Moscow-Beijing agreement to 30 million tonnes a year, starting in 2018.
Crude oil supplies to China both via ESPO pipeline spur and Kazakhstan will increase to 38.3 million tones in 2018 from 26.7 million tonnes in 2017, Transneft data shows.
Higher output at Russian refineries was also cited as a reason for lower exports by Transneft’s vice-president, Sergei Andronov.
Urals exports through the Druzhba (Friendship) pipeline, which ships crude oil straight to the consumers in Europe, will remain stable in 2018.
Exports via Druzhba to Germany and Poland will be at 36 million tonnes in 2018 compared with 35.5 million tonnes in 2017, while exports to Czech Republic, Hungary and Slovakia will be unchanged from 2017 at 14 million tonnes, Transneft data shows.
Reporting by Vladimir Soldatkin; Writing by Olga Yagova; Editing by David Goodman