MOSCOW (Reuters) – Russia’s vast Arctic oil business is facing major disruption from U.S. sanctions on its tankers and depots, stranding crude supplies previously snapped up by Asian buyers in storage, based on three sources accustomed to its logistics.
The sanctions unveiled on Friday are the hardest yet on Russia’s oil sector, targeting major producers Gazprom Neft and Surgutneftegas in addition to 183 vessels which have shipped Russian oil.
Three sources who spoke to Reuters on condition of anonymity said all three of Russia’s Arctic oil grades – Novy Port, ARCO and Varandey, with about 300,000 barrels of output per day – face disruption.
The vessels and infrastructure needed by Russia’s Arctic oil business, which accounts for a tenth of its seaborne oil exports, are unique, two of the sources said.
Novy Port crude from Gazprom Neft’s Novoportovskoye field, where temperatures can hit -55 C, ARCO, from the Prirazlomnaya offshore platform, and Varandey, from Lukoil’s Timan-Pechora fields, are shuttled by a special variety of ice-class vessel to the Umba and Kola floating storage facilities near Murmansk.
It’s then offloaded to larger vessels – Aframax or Suezmax that may carry 100,000-140,000 tons, in comparison with the smaller vessels’ 30,000 tons – for shipment to the international market.
The USA has now sanctioned each Umba and Kola, and greater than a dozen small tankers used as shuttle suppliers of oil from the fields.
Based on LSEG data, no less than 15 of the tankers sanctioned by the U.S. on Friday, including the Shturman Scherbinin, Mikhail Ulyanov and Aulis, have been actively involved in shipping Russian Arctic grades in the course of the last two months.
The smaller shuttle tankers were designed to operate in northern seas and have a particular design allowing them to load more oil without compromising keel clearance.
“There is no such thing as a option to exchange those quickly. Nothing like this to purchase elsewhere. The vessels were specifically built for the projects,” certainly one of the sources said.
That would leave Russia with tens of millions of barrels of unsold oil in storage, the sources said. Based on one, the limited storage capacities in any respect three projects mean a few weeks of loading disruptions might result in cuts in output.
Lukoil didn’t reply to Reuters’ requests for comment, while Gazprom Neft declined to comment.
Gazprom Neft, which produces ARCO and Novy Port, was also added to the U.S. sanction package directly, although Lukoil, which produces Varandey, was not.
ASIA BOUND
Novy Port and Varandey are favoured by refiners worldwide for his or her top quality – each are light, with 0.1-0.4% sulphur.