Exclusive: Saudi Arabia doubles Q2 Russian fuel oil imports for power generation

Individuals stroll close to energy plant quantity 10 at Saudi Electrical energy Firm’s Central Operation Space, south of Riyadh, April 27, 2012. REUTERS

MOSCOW/LONDON/DUBAI, July 11 (Reuters) – Saudi Arabia, the world’s largest oil exporter, greater than doubled the quantity of Russian gasoline oil it imported within the second quarter to feed energy stations to fulfill summer season cooling demand and unencumber the dominion’s personal crude for export, knowledge confirmed and merchants stated.

Russia has been promoting gasoline at discounted costs after worldwide sanctions over its invasion of Ukraine left it with fewer patrons. Moscow calls the struggle in Ukraine a “particular navy operation”.

The elevated gross sales of gasoline oil, utilized in energy era, to Saudi Arabia present the problem that U.S. President Joe Biden faces as his administration seeks to isolate Russia and reduce its vitality export revenues.

Whereas many nations have banned or discouraged purchases from Russia, China, India and a number of other African and Center Jap nations have elevated imports.

Biden is because of go to Saudi Arabia later this week, when he’s anticipated to hunt a rise in oil provide to world markets from the dominion to assist decrease oil costs which have aggravated inflation worldwide.

There may be little spare capability for Saudi and others to extend manufacturing within the brief time period. Saudi Arabia has additionally maintained its cooperation with Russia within the alliance of worldwide producers referred to as OPEC+. The 2 are the de facto leaders of respectively OPEC and non-OPEC producers in that group.

Information obtained by Reuters by Refinitiv Eikon ship monitoring confirmed Saudi Arabia imported 647,000 tonnes (48,000 barrels per day) of gasoline oil from Russia by way of Russian and Estonian ports in April-June this yr. That was up from 320,000 tonnes in the identical interval a yr in the past.

For the complete yr 2021, Saudi Arabia imported 1.05 million tonnes of Russian gasoline oil.

Saudi Arabian and Russian vitality ministries declined to touch upon the elevated imports.

Saudi Arabia has for a number of years imported Russian gasoline oil, which may scale back its must refine crude for merchandise and reduce the quantity of oil it must burn for energy, leaving it with extra unrefined crude to promote on worldwide markets at increased costs.

The dominion turns to grease to fulfill energy wants, which usually peak as demand for cooling rises with summer season temperatures. Some Saudi cities are removed from pure fuel fields that might present cleaner gasoline for energy era.

The amount of crude burnt is about 600,000 bpd in summer season months and 300,000 bpd in winter months, figures from the Joint Organisations Information Initiative (JODI) present. Elevated use of pure fuel has lowered the quantity from as a lot as 1 million bpd in 2010.

HUB IN FUJAIRAH

Saudi Arabia has additionally imported extra Russian gasoline oil by way of the Center East oil hub of Fujairah within the United Arab Emirates, merchants stated.

Fujairah has acquired 1.17 million tonnes of Russian gasoline oil thus far this yr, in accordance with ship monitoring, in comparison with 0.9 million in the identical interval final yr.

An additional 0.9 million could possibly be delivered to Fujairah in July alone, in accordance with shiptracking, bringing the overall to 2.1 million thus far this yr, exceeding the 1.64 million tonnes for the entire of 2021.

A lot of the gasoline oil in Fujairah is offered there as gasoline for ships, however a few of it’s shipped to neighbouring nations. It’s unclear how a lot extra Russian gasoline is flowing to Saudi Arabia by way of Fujairah.

Saudi has expanded its refining capability to three.6 million bpd from 2.9 million in 2017.

Its refining utilisation charges stood at 70%-73% in April-June this yr, regardless of output rising to above 10 million bpd.

This compares to 75%-95% in the identical durations of 2017-2019, the final time its manufacturing was not severely lowered by output cuts by the Group of Petroleum Exporting International locations and allies (OPEC+).

In the meantime, exports of crude and merchandise have been at or near an all-time excessive 9 million bpd in February-April, JODI figures confirmed, with crude exports alone at or near 7.3 million bpd.

Reporting by Reuters; Enhancing by Simon Webb and Barbara Lewis

Our Requirements: The Thomson Reuters Belief Ideas.