Unlock stock picks and a broker-level newsfeed that powers Wall Street.Upgrade Now
Russia Steps Up Covert Cargo Transfers to Keep Its Oil Moving
1 / 8
Russia Steps Up Covert Cargo Transfers to Keep Its Oil Moving
Julian Lee
6 min read
(Bloomberg) -- As Russia’s invasion of Ukraine enters its fourth year, Moscow is increasingly resorting to clandestine cargo transfers as it wrestles with sanctions and tries to keep its oil exports flowing.
Cargo switches from specialized shuttle tankers and sanctioned ships are helping to maintain flows out of Russia’s ports in the Pacific and Arctic, vessel-tracking data compiled by Bloomberg show. Still, shipments dropped sharply in the latest week, and delivering the cargoes to China and India is proving challenging.
About 51 million barrels of crude has been shipped from Russia’s Pacific ports since the latest round of US sanctions on Jan. 10, the tracking data show. Fewer than 39 million barrels have been delivered in the same period and almost one-quarter of those were lifted before the sanctions came into effect. About 9 million barrels remain on tankers that have been idle for at least a week. With much longer delivery times, the impact on flows from western ports is less clear.
A drop in shipments from the Black Sea and the Arctic last week saw four-week average crude shipments from Russian ports in the period to Feb. 23 fall to 2.94 million barrels a day, down by 3% from the period to Feb. 16.
Covert Transfers
None of the nine tankers to have left Murmansk after being sanctioned by the US last month has yet discharged its cargo.
In a sign that sanctions are biting, the first ships to load at Murmansk after being blacklisted by the US Treasury Department’s Office of Foreign Assets Control on Jan. 10 should have arrived at their Indian destinations by now. But some have been diverted to China, while another has offloaded its barrels onto another ship. A third is idling at anchor far from its destination. The same is true in the Pacific.
In the Pacific, cargoes are being switched from shuttle takers to other vessels to maintain flows of crude from Russia’s two Sakhalin projects. But even after they have been transferred, Pacific cargoes are not proving easy to discharge.
A supertanker hauling about 2 million barrels of Sokol crude has been anchored off Yantai in China since Feb. 17 after taking on the cargoes via ship-to-ship transfers during the first 10 days of the month.
Three more Sokol cargoes are on specialized shuttle tankers loitering near the port of Nakhodka, likely waiting to be moved onto other vessels. One has been holding its cargo for more than a month.
Two cargoes of Sakhalin Blend crude are on tankers off Hong Kong, where a third cargo vanished earlier this month, either through a covert move to another vessel, or a hidden discharge at one of the oil terminals in the area.
Pacific flagship ESPO crude is moving more smoothly, with a fleet of unsanctioned tankers pulled in to keep barrels moving, mostly to China. Some of those ships were previously hauling Iranian barrels and two that have recently taken Russian cargoes, the Phoenix I and the Urgane I, were sanctioned on Monday for their involvement in the Iranian trade.
Crude Shipments
A total of 27 tankers loaded 19.89 million barrels of Russian crude in the week to Feb. 23, vessel-tracking data and port-agent reports show. The volume was down from 25.02 million barrels on 32 ships the previous week.
Daily crude flows in the seven days to Feb. 23 slumped by about 730,000 barrels, or 21%, from the previous week to 2.84 million. The drop reversed more than half of a 55% jump seen the previous week.
Shipments of Russian crude from Novorossiysk fell to zero, while flows from the Arctic were also down. Exports from the Baltic were unchanged from the previous week, with an increase in operations at Primorsk offsetting a decline at Ust-Luga.
Less volatile four-week average flows were down by about 90,000 barrels a day from the previous week, to 2.94 million barrels a day.
Two cargoes of Kazakhstan’s KEBCO crude were loaded during the week from Novorossiysk and a third departed Ust-Luga.
Export Value
The gross value of Moscow’s exports fell back by about $290 million, or 19%, to $1.27 billion in the week to Feb. 23.
Export values of Russian Urals crude rose by about $1 a barrel, while the price of key Pacific grade ESPO rose by about $1.60/bbl. Delivered prices in India were down by about $0.10, all according to numbers from Argus Media.
On a four-week average basis, income fell to about $1.3 billion a week, down from $1.36 billion in the period to Feb. 23 to the lowest since July 2023.
Flows by Destination
Observed shipments to Russia’s Asian customers, including those showing no final destination, slipped to 2.76 million barrels a day in the four weeks to Feb. 23, falling to about 10% below the average level seen during the most recent peak in October.
Turkey is now the only short-haul market for shipments from Russia’s western ports, with flows in the 28 days to Feb. 23 falling to about 160,000 barrels a day, the lowest since September. Turkey’s biggest refiner confirmed it has halted purchases of Russian oil after earlier signaling that it would restrict them to avoid falling foul of US sanctions.
NOTES
This story forms part of a weekly series tracking shipments of crude from Russian export terminals and the gross value of those flows. The next update will be on Tuesday, March 4.
All figures exclude cargoes identified as Kazakhstan’s KEBCO grade. Those are shipments made by KazTransoil JSC that transit Russia for export through Novorossiysk and Ust-Luga and are not subject to European Union sanctions or a price cap. The Kazakh barrels are blended with crude of Russian origin to create a uniform export stream. Since Russia’s invasion of Ukraine, Kazakhstan has rebranded its cargoes to distinguish them from those shipped by Russian companies.
Bloomberg classifies ship-to-ship transfers as clandestine if automated position signals appear to be switched off or falsified — a tactic known as spoofing — to hide the two vessels involved coming together to make the cargo switch.
Vessel-tracking data are cross-checked against port agent reports as well as flows and ship movements reported by other information providers including Kpler and Vortexa Ltd.
If you are reading this story on the Bloomberg terminal, click for a link to a PDF file of four-week average flows from Russia to key destinations.
