code_noname (code_noname) wrote,

под дых!

Мда, если нижеприведенная рейтеровская каля-маля окажется чистой правдой, опять плакали наши долгожданные 60-80 миллиардов роскитовской торговли в нынешнем году. да и в следующем - тож, при наихудшем развитии ситуации...

* China eyes pressure on ESPO to curb longer term prices

* Further term contracts unlikely before China buys more

* Better-than-expected ESPO quality creates blending options

By Alejandro Barbajosa and Judy Hua

SINGAPORE, May 5 (Reuters) - Russia's ESPO crude is facing a price squeeze and backlogs as China delays purchases in a bargaining strategy that has left producers including Rosneft and Surgutneftegaz without their most sought-after customer.

Values for crude moved via the East Siberia-Asia Pacific pipeline (ESPO) are returning to lows hit when Russia began pumping in December, off the first-quarter highs when refiners from North and Southeast Asia to California tested the grade.

ESPO's trial phase is virtually over and Chinese refiners, set to become top consumers of the crude with the completion of a CNPC pipeline by year end, have taken just one of more than 50 cargoes slated for January to May loading.

China is trying to curb the long-term costs of the crude and similar Russian grades the country already imports, traders familiar with the situation said.

"If the ESPO price goes up very quickly, the term price for supplies flowing through CNPC's pipeline will increase because it is crude of the same quality, also coming from those fields," said a trader with a major North Asian crude buyer.

"We'd like to see some kind of pressure on ESPO prices."

China National Petroleum Corp (CNPC) and Russian pipeline monopoly Transneft aim to complete by end-2010 a duct slated to send 300,000 barrels per day (bpd) of ESPO to northern China. That will add to the 10 million tonnes a year (200,000 bpd) of Russian crude from Siberia CNPC already imports by rail.

Current ESPO prices may affect term negotiations, which are generally based on spot trades done in the run-up to the completion of the agreements, meaning buyers have an interest in keeping prices low even as they start regular purchases.

"As soon as the Chinese are on one grade, it tends to inflate the price," said Virginie Bahnik, consultant at KBC Energy Economics in the UK.

"Why should they go and participate in that if West African and Middle Eastern grades don't look particularly expensive?"


China sources most of its crude from those two regions, led by Angola and Saudi Arabia this year. The world's second-largest oil user also bought more than 300,000 bpd of Russian crude last year, more than 7 percent of its total imports.

The opening of CNPC's pipeline to pump ESPO from 2011 could potentially double that share, as Russia, the world's No. 2 oil exporter after Saudi Arabia, seeks to diversify its exports from the West and is targeting China as the key market for oil extracted from a new generation of fields in East Siberia.

"China will have ESPO on guarantee once the pipeline is constructed," Bahnik said. "They will have to take it one way or the other once the pipeline is in place, and negotiate a sensible price for both parties."

Current ESPO output is entirely exported from Kozmino. The spur to China will allow Russia to double production to 600,000 bpd within two years.

"They can take quite a bit of ESPO in China because they need to balance out against the vast increase in heavy sour crude they are taking from the Middle East," said Al Troner, president of Houston-based Asia Pacific Energy Consulting (APEC).

"But are they going to take huge volumes right away? No," he said. "They are curious about the new crude, so they just pick one cargo to see how it runs."

Asia's top refiner Sinopec was the first Chinese firm to buy ESPO through trading arm Unipec, which in February bought a March-loading cargo. Some traders said Sinopec processed the crude at the Yanshan refinery near Beijing.

Only CNPC will receive term ESPO supply via the pipeline under construction, so the pricing of spot cargoes from the Russian Pacific port of Kozmino near Vladivostok will remain relevant to Sinopec.

"CNPC may shift some of that East Siberian crude on rail over to the ESPO, and Sinopec will take a bit more," Troner said. "You are going to see Sinopec mainly starting to pull ESPO into its refineries such as Shanghai and Maoming just to feel what it looks like."


Rosneft, Russia's top oil firm and the largest producer of ESPO, has mostly sold its output of the grade to traders via tenders, foregoing premiums at which the intermediaries sell cargoes to end users.

And so far, shipments have often ended up away from target destinations, including at BP's two refineries in the U.S. West Coast, as backlogs developed in Northeast Asia.

This has occasionally led to a two-tiered market where firms including European traders Crudex, Trafigura and Vitol as well as Japan's Mitsubishi buy the cargoes direct from producers and sell at higher prices to Northeast Asian refiners including South Korea's GS Caltex and SK Energy when needs arise.

"If China continues its wait-and-see stance on ESPO, I don't think demand in Asia will improve near term," said a trader with a Western firm. "Japan already has many term deals with Mideast and its run rate is not very high, limiting its demand for ESPO."

Mitsubishi, Trafigura and oil major BP are so far the only companies known to have signed term deals for ESPO, taking supplies from producer TNK-BP. Under current circumstances, it is unlikely others will follow, traders said.

"Once China jumps in and all the unknown factors are known, many end users wouldn't mind having a term contract," a trader with a Northeast Asian refiner said. "The price will be derived from the export terminal."

ESPO may become less attractive with cheaper freight rates and lower profitability of making gas oil, of which the grade has a high content, traders and analysts said.

That would lower its edge over Middle East grades, but ESPO's steady quality even as output rose over the past months also made it a viable long-term rival to lighter West African crude. This means refiners are using ESPO to blend with cheaper, heavy sour grades to optimise product yields and maintain good margins.

"If the price of ESPO increases and gas oil cracks decline, of course ESPO will be less attractive, you should get back to the Mideast," APAC's Troner said. "But the whole point is that this is a new factor that Mideast exporters have to take into account that they didn't have to worry about five years ago." (Additional reporting by Florence Tan and Ryan Siew, James Topham in TOKYO; Editing by Ramthan Hussain)

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