U.S. sour crude cargo sails to Germany as Russia sanctions bite

LONDON/HOUSTON, Aug 8 (Reuters) - A tanker of U.S. sour crude was delivered at Germany's port of Rostock last week for the first time ever, according to sources, analysts and vessel tracking data, as local refiners test alternatives to Russian oil.

The European Union plans an almost-complete embargo of Russian barrels by year-end, and is trying to wean itself off Russian crude imports, which have fed inland refineries in Germany, Poland and other central European nations via pipeline.

Refiners plan to replace Russian oil with seaborne Norwegian, Saudi Arabian, British and U.S. crude grades. Russia has already shown through its natural gas exports that it is willing to cut off European destinations in a tit-for-tat over the EU's financial sanctions that followed Moscow's invasion of Ukraine in February. read more

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According to Refinitiv ship tracking data, the Capricorn Sun tanker loaded Mars Sour crude off the Louisiana coast in the United States and discharged at Rostock on Aug. 3. The tanker was chartered by Shell, according to two sources and Refinitiv ship tracking data, and estimated to have carried about 570,000 barrels, based on shipping data.

Shell declined to comment on the movement of cargo or ships and related contracts.

A German government source said the cargo is destined for the 233,000 barrel-per-day PCK Schwedt refinery to "test" how the refinery runs on non-Russian crude.

The refinery is majority-owned by Russia's state oil firm Rosneft, while Shell and Eni hold minority stakes. It did not have an immediate comment.

"Although this is the first Mars crude oil shipment, there have been West Texas Sour shipments (to Germany) in the past, albeit few and far between," said Jim Mitchell, head of Americas oil analysts at Refinitiv.

"Mars has a higher distillate content than the WTI or the Eagle Ford grades. As the winter looms, Germany will increase its demand for distillate wherever they can get it from."

Distillates include refined products such as diesel, jet fuel and gasoil that is used for heating. Heavier, sour grades of oil tend to produce more distillate fuels than gasoline. Germany depends on Russia as a major source of diesel.

The Rostock oil terminal in the Baltic Sea is connected via pipeline to two refineries - the PCK Schwedt refinery and TotalEnergies' 240,000 barrels per day Leuna plant.

Both PCK Schwedt and Leuna continue to receive Russia's main crude grade, medium sour Urals, through the Druzbha pipeline in compliance with EU sanctions on Moscow for its invasion of Ukraine. The Rostock connection has less capacity than Druzhba.

Previously, German economy minister Robert Habeck said the country was working on solutions for PCK Schwedt, including dipping into national oil reserves as well as getting shipments from Rostock and possibly Gdansk in Poland.

PCK Schwedt supplies most of Berlin's fuel and Germany is struggling to wrest control of the plant, fearing retaliation by Moscow if the site is nationalised and as Western firms hesitate to step in. read more

The United States exported nearly 3 million barrels of oil a day in 2021, but Germany is a fairly minor buyer, only importing about 77,000 bpd, according to U.S. Energy Department figures.

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Reporting by Shadia Nasralla in London and Arathy Somasekhar in Houston; Additional reporting by Stephanie Kelly, Julia Payne and Markus Wacket; Editing by David Gregorio and Louise Heavens

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