China And India Are Buying Up Russia’s Arctic Oil

China And India Are Buying Up Russia’s Arctic Oil

Subject: Geography

Context: After being hit by western sanctions, Russia is boosting its shipments of oil produced in the Arctic region to India and China at steeper discounts.

• Arctic crude exports to India hit a record of 6.67 million barrels in November with a further 4.1 million in December, Refinitiv data showed.
• Arctic grades Arco, Arco/Novy Port and Varandey do not normally head East but are now finding new homes further afield after the West introduced a price cap on Russian oil in December.
• Russia’s grades from the Arctic – Arco, Arco/Novy Port, and Varandey – have been selling at deep discounts in China and India as the EU embargo and the G7 price cap have further pushed more Russian crude to customers in Asia that have not joined the Price Cap Coalition
• Indian has diversified its purchases of Russian crude to include Arctic grade Varandey Blend for the first time, as it further increases its dependence on Russian oil.
• Indian received 1.82mn bl (59,000 b/d) of light sour Varandey Blend from the Barents Sea port of Murmansk in December 2022, Vortexa data show. This is the first time India has ever imported this grade, which is produced by Russian firm Lukoil, according to Vortexa.
• December’s Varandey Blend imports were delivered on two Suezmax vessels at Kochi and Vadinar ports.
• Vadinar port, in west India’s Gujarat state, received 923,531 bl at state-controlled IOC’s single buoy mooring system, which pumps oil to IOC’s Mathura refinery in north India’s Uttar Pradesh state. Kochi received 896,629 bl of Varandey Blend at state-controlled Bharat Petroleum’s single point mooring facility, Vortexa data show.
• Four Varandey Blend cargoes are scheduled for January delivery. Vishakhapatnam port in the south India’s Andhra Pradesh state, where state-run Hindustan Petroleum operates a 166,000 b/d refinery, is scheduled to receive 925,555 bl on 9 January. Another 748,892 bl of Varandey Blend is scheduled to be delivered on 10 January to Vadinar port, where Russian-owned Nayara Energy operates a 400,000 b/d refinery.
• Paradip port in east India’s Odisha state of is due to receive 925,518 bl on 16 January. IOC operates a 300,000 b/d refinery at Paradip. Mumbai port in west India will take delivery of 923,531 bl on 27 January.
• India’s total imports of Russian crude, excluding CPC blend of Kazakh origin, rose to an all-time high of 1.19mn b/d in December. Imports remained above 1mn b/d for the seventh straight month, aided by discounts offered by Russian producers in the wake of Europe’s reduced imports of Russian oil.