VGO loadings from Russia's Tuapse crash to zero for April
6th April 2022 15:58 GMT

No vacuum gas oil is set to be exported from the Russian Black Sea port of Tuapse in April, according to a copy of the loading schedule seen by S&P Global Commodity Insights, as European buyers increasingly turn their backs on Russian feedstocks.

By comparison, 150,000 mt of VGO was set for export from Tuapse in March, and 120,000 mt in February, according to S&P Global data.

Despite previously comprising a significant proportion of the market -- which some traders estimate at around 90% of the traded barrels -- a growing list of buyers have taken the decision to self-sanction Russian-origin products in response to Russia’s invasion of Ukraine.

This decision to self-sanction Russian products has killed demand for Russian VGO, especially in Northwest Europe.

"There is just no demand for Russian VGO in Northwest Europe," a trader said.

The decision to avoid Russian products has significantly hampered liquidity across Europe, with buyers looking for the limited supply of non-Russian VGO, or instead turning to run cuts to produce feedstocks in-house.

"Russian barrels simply don't trade. So even if non-Russian volumes are scarce, there is still more trading than [for] Russian barrels," a second trader said.

In response, sources said that refineries in Russia have reduced the production of feedstocks, to limit a glut of excess volumes that cannot find homes, tightening even the supply of Russian VGO from both the Black Sea and the Baltic ports.

"Everyone [European refineries] is using their own stuff [VGO]. It's a very difficult market," said a third trader.

Tuapse, owned by state-controlled Rosneft, produces feedstock such as fuel oil, naphtha and VGO for export, rather than finished-grade products.

Russia's refineries are major producers and exporters of fuel oil feedstocks such as high and low sulfur vacuum gasoil, which are processed in the secondary units of complex plants.

In 2021, Russia exported 17.3 million mt of VGO, about 60% of global exports, with shipments of 9.5 million mt to Europe, according to Kpler shipping data.

Bunkerworld .,
6th April 2022 15:58 GMT