Premiums for Kazakh KEBCO to Russia's Urals narrow as EU show caution- sources

Rompetrol Rafinare SA

01/11/2023 09:58

MOSCOW, Nov 1 (Reuters) - Kazakh KEBCO oil premiums to
Russian Urals oil fell amid low demand from oil refiners in
Europe who are cautious about rising scrutiny on oil shipments
from Russian ports, three trading sources said.
    The development shows how wide ranging Russian sanctions are
embroiling other producers affecting even companies from the
United States and the EU, which are extracting oil in
Kazakhstan.
    In early November, the United States imposed sanctions on
two ship-owners transporting Russian oil priced above the
Western ceiling of $60 per barrel raising caution amid EU
players.
    Kazakhstan, that rely on Russian ports for most of its oil
exports, back in 2022 changed the name for its oil transiting
through the Transneft pipelines to KEBCO to separate its oil
from Urals. 
    Many western companies such as Chevron, ExxonMobil, Italy's
Eni and France's Total hold large stakes in oil and gas projects
in Kazakhstan.
    In terms of quality, KEBCO is the same as Urals, while the
origin of this oil is Kazakhstan. Prior to Russia's invasion of
Ukraine, which Moscow calls special military operation, Kazakh
oil traded in line with the price level of Urals and did not
have a separate name.
    The United States and the European Union previously
clarified that oil from third countries being transited through
Russia are not subject to sanctions. However, many EU refiners
are showing extra caution and refrain from buying any oil
loading from Russian ports.
    KEBCO is currently shipped from Russia's Black Sea's
Novorossiisk and Baltic Ust-Luga ports and via Druzhba pipeline
northern leg to Germany.
     The premium for KEBCO oil to Urals on a CIF MED basis for
deliveries to Italy and Turkey decreased in October to just $1.3
per barrel from $16.7 per barrel in January 2023, according to
Reuters monitoring.  URL-KBC-NWE 
    KEBCO discount to dated Brent declined less dramatically to
$12.6 per barrel by October from $9.9 per barrel in January, as
price level for Urals oil has been improving since the start of
the year amid good demand in Asia.
    European refiners are not willing to pay high prices for oil
shipped from Russian ports amid logistical issues, requirements
to prove non-Russian origin of oil and the clearing of payments.
    Many EU companies have introduced restrictions on vessels
that have entered Russian ports in previous months, which is
also an issue, the sources said.
    Turkey, Italy and Romania remain the main buyers of KEBCO
oil.
    KEBCO is supplied to Romania for the Rompetrol Rafinare
refinery owned by KazMunaiGas (KMG), the remaining volumes are
sold on the market to various refiners