Norway helping plug Europe oil gap as Russian barrels head east

Orron Energy AB

28/06/2022 14:01

* Johan Sverdrup oil exports to Europe have tripled
    * March-May exports to China down by two-thirds
    * EU embargo to affect 90% of Russian oil imports by
year-end
    * As Europe turns away, China, India taking more Russia
crude

    By Nerijus Adomaitis
    OSLO, June 28 (Reuters) - As Europe searches the world for
oil to replace Russian barrels, one oilfield closer to home is
helping plug the gap.
    Norway's Equinor  EQNR.OL  is sending crude from the giant
Johan Sverdrup field in the North Sea to the European market
instead of Asia, where it exported about 100 million barrels
last year. 
    At the same time, Russia is finding demand for the crude
Europe is pulling back from in Asia, with China and India
boosting their intake attracted by deep discounts.  urn:newsml:reuters.com:*:nL1N2Y30AS
    In Europe Norwegian crude has become almost a direct
replacement for Russia's similar Urals grade for refiners in
Germany, Poland, Lithuania, Sweden and Finland as well as in
Turkey, according to Equinor. 
    "European traders and refineries are now requesting Johan
Sverdrup grades and use those to replace some of the grades
they've got from Russia before," CEO Anders Opedal told Reuters.
    "We have seen that so far this year most of the cargoes went
to Europe," Opedal said. "In March, all the cargoes went to
Europe, while in March last year, 60% went to Asia."
    Cheaper shipping costs due to shorter European deliveries
are also providing Equinor with extra profit on top of the
already record high revenue it is generating helped by sales -
including natural gas - to energy-starved Europe. 
    Western nations are seeking to reduce their dependence on
Russian oil and gas after Moscow's invasion of Ukraine in
February, something Russia refers to as a "special military
operation".
    
    CHINA
    In 2021, about 100 million barrels of Sverdrup's crude went
to Asia, or 274,000 barrels per day, including 64.9 million
barrels to China, Refinitiv Eikon data showed. 
    Exports to Europe, including Turkey, were broadly on a par
with China last year.
    Since the start of Russia's invasion of Ukraine, however,
Sverdrup's flows to China have dried up, while those to Europe
have more than doubled.
    Only five Sverdrup cargoes sailed to Asia between March and
May, down from 15 a year earlier.
    Exports to China halved to 6.9 million from 14 million
barrels, with no cargoes departing for China in May.
    Meanwhile, Sverdrup's exports in the last three months to
Europe, including Turkey, rose to 34.4 million, or 374,000 bpd,
tripling from 11.1 million barrels a year earlier.
    
    Sverdrup, named after the father of Norwegian
parliamentarism, also exported 7.1 million barrels to Finland,
5.6 million barrels to Germany and 3.4 million to Lithuania,
compared with zero exports in March-May 2021. 
    Exports to Poland rose to 5 million from 900,000 barrels, to
Sweden rose to 4 million from 1.5 million, and to the
Netherlands to 4.2 million from 2.6 million barrels. 
    Sverdrup is planning to boost output by 220,000 bpd to a
total of 755,000 bpd by the end of this year. 
    Provided that the extra production also goes to Europe,
Sverdrup could replace up to 484,000 barrels, or more than a
fifth of the EU's former Russian oil supply, which stood at
about 2.2 million bpd in 2021.
    

    EU plans call for an embargo affecting 90% of its Russian
oil imports by the end of the year.  urn:newsml:reuters.com:*:nL1N2XM09L
    "The Phase 2 start-up, which we expect in December,
coincides with the EU embargo ... so there is a clear
opportunity for Sverdrup to remain the region's most supplied
medium grade," said Janiv Shah, an analyst at consultancy Rystad
Energy.
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Norwegian barrels to northeastern Europe    https://tmsnrt.rs/3O9D2DD
Russian barrels to northeastern Europe    https://tmsnrt.rs/3N2eZVK
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Additional reporting by Shadia Nasralla in London; editing by
Jason Neely)
 ((nerijus.adomaitis@thomsonreuters.com; +47 9027 6699; Reuters
Messaging: nerijus.adomaitis.thomsonreuters@reuters.net))