Surgutneftegaz fails to place its March Urals oil as sanctions bite

MOSCOW, March 2 (Reuters) - Russia's Surgutneftegaz (SNGS.MM) failed to award its spot tender for 880,000 tonnes of Urals oil loading from Russian ports in March as buyers shunned the volumes, raising doubts about Russian export loadings, traders said on Wednesday.

Surgutneftegaz has been failing to sell any of its Urals oil volumes since the end of last week as usual costumers refrained from buying Russian barrels after the West imposed sanctions on Moscow over its invasion of Ukraine.

The buyers didn't provide any bids in the tender, traders said, adding that they were not able to open letters of credit and it was extremely hard to find tankers to ship oil from Russian ports.

Two crude oil tankers due to load Russian Urals and Kazakh CPC blend this week have been or are due to be cancelled, sources told Reuters.

Although the sanctions do not specifically target Russian oil and gas, they have disrupted its commodities exports.

So far Surgutneftegaz failed to place some 1 million tonnes of Urals oil loading in March, traders said, or around 12% of planned exports from Russian western sea ports that were set at 8.36 million tonnes, Reuters calculations showed.

Other Russian oil companies also found it difficult to place Urals cargoes loading from sea ports after March 20 and cargoes were mostly unplaced, traders said.

"If the situation persists, we expect many cancellations and the March loading plan may look much smaller than the one issued initially", a trader in the Russian oil market told Reuters.

It was not clear how cancelled export volumes may be placed, while traders expected them to be put into storage.

Russian oil refineries didn't show much demand for extra oil as the state's oil products were also difficult to place in foreign markets.

The independent Novoshakhtinsk refinery in Russia's southern Rostov region has suspended operations as a result of transport problems and falling demand for Russian oil products due to sanctions, three industry sources said on Wednesday.

In the tender that closed today, Surgutneftegaz offered 800,000 tonnes of Urals oil loading from Baltic Primorsk on March 25-26 and 29-30 and Ust-Luga port on March 13-14, 15-16, 19-20, 22-23, 25-26 and 27-28. Surgutneftegaz also offered 80,000 tonnes of Urals loading from Novorossiisk on March 13-14.

Moscow newsroom, Editing by Louise Heavens and Emelia Sithole-Matarise

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