New tracking data reported on by Kommersant revealed that exports of ESPO (Eastern Siberian Pacific Ocean) grade crude by Russian oil companies directed to China through the port of Kozmino, have increased dramatically, with this month’s deliveries hitting a record high.
Russian shipments of ESPO from the Far Eastern port hit an all-time high of 925,000 barrels per day (bpd) in December, with 85% of those shipments heading for China, according to the outlet, which drew upon data from the energy analytics firm Kpler. Experts said the surge in exports of the crude oil grade were a result of increased railway deliveries.
Following a ban on Russian crude oil in the EU imposed last year, as well as the imposition of a raft of economic sanctions which were designed to cut Russia off from Western financial mechanisms of cross-border trade settlement, Russia has worked to diversify its trade partners as well as its means of settlement. Russian oil companies rerouted much of their supply of East Siberian crude to Asian nations, as they also resumed rail transportation of shipments. However the outlet noted that rail shipments have been in limited demand due to higher tariffs in recent years.
Earlier this year, Nikolay Tokarev, the head of Transneft, Russia’s state-owned pipeline transport company said, “We are preparing to restore oil supplies for export from the first stage of the ESPO pipeline via the railway, through which only about 15 million tons of oil were previously shipped.”
Trading at a premium to Russia’s flagship crude blend, Urals crude, the light sweet grade of crude that is ESPO has proven quite profitable for Russian exporters, according to Kommersant. ESPO also has a shorter distance to travel from its point of production to consumption, adding to its profitable cost structure.