Turkey saves $2 bln on Russian oil as imports soar despite sanctions

Turkiye Petrol Rafinerileri AS

18/12/2023 11:08

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      Turkey's Urals crude imports hit all-time high in November
    

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      Turkey's import of Russia's diesel jump 200% 
    

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      Moscow, Ankara discussing major gas hub
    

  
       MOSCOW, Dec 18 (Reuters) - Turkey and Turkish companies
have saved around $2 billion on energy bills in 2023 by raising
imports of discounted Russian oil and refined products, Reuters
calculation based on LSEG data and traders' estimates showed,
and Ankara wants to buy more from its neighbour despite Western
sanctions. 
    Turkey became the biggest importer of Russian energy in the
Western hemisphere after Russia's invasion of Ukraine triggered
European countries to halt most imports of Russian oil and gas.
China and India have imported larger volumes from Russia than
Turkey, but Ankara's proximity to Russian ports, however, means
it is saving more than other buyers thanks to cheaper freight.
    Russian Urals crude oil shipments to Turkey rose to an
all-time high of 400,000 barrels per day (bpd) in November 2023,
accounting for some 14% of Russia's overall seaborne oil exports
last month, LSEG data and Reuters calculations showed.   
    Russia's energy ministry declined to comment. Turkey's
energy ministry, Turpas and STAR refiner didn't respond to 
requests for comments.
    Supplies to Turkey are expected to rise further in the
coming months after private Russian oil producer Lukoil signed a
deal with Azeri firm SOCAR to refine up to
200,000-barrel-per-day of its oil at Socar’s Turkish STAR
refinery, trading sources said.
    On top of rising crude supplies, Turkey's imports of Russian
diesel, heating oil, jet and marine fuel jumped 200% in
January-November 2023 to some 0.29 million barrels per day.
    Russia supplied to Turkey in January-November 13 million
tonnes of distillates including 8.6 million tons of ultra low
sulphur diesel (ULSD 10ppm) compared to 4.3 million tons of
distillates including 3.2 million tons of ULSD over the same
period of 2022, LSEG data showed and traders said.
    Turkey has been paying between $25 and $150 less for a ton
($3.3-20 per barrel) of Russia diesel this year compared to
prices for similar grades in the Mediterranean, according to
traders. For crude, it had discounts of between $5-20 per
barrel. Cheaper energy imports have helped Ankara narrow its
trade deficit and lessen pressure on its currency, which
devalued 30% so far this year.
    Turkey has also increased exports of diesel over the same
period by 120% to 6.03 million tons from 2.75 million in
January-November 2023, according to LSEG data.
    Multiple activists and supporters of Ukraine have accused
Turkey of effectively helping Russia channel its products to
Europe bypassing sanctions. The country denies the accusations
and says it is exporting fuels refined from various types of
crude.
    
    THE SWEETEST CRUDE
    Turkey is not unique in enjoying big savings on Russian oil
purchases. 
   India, which also refused to join sanctions against Moscow,
has boosted imports of Russian oil by 77% so far this year. It
has saved roughly $2.7 billion on Russian oil imports in the
first nine  of 2023, according to calculations based on
government data. But India imported much larger volumes of
Russian oil to the tune of 1.7 million bpd, meaning per barrel
savings for Turkey were much higher.
    Traders said the savings can be made on freight rates as
they estimate it currently costs $6 million to bring a tanker
with Russian oil to Turkey compared to $9 million to India.
    Kpler's analyst Viktor Katona said Turkey's refiners have
become some of the most profitable plants in the Mediterranean
since Russian sanctions have been imposed in February 2022.
    Katona said Turkey's largest oil refiner Tupras had a gross
profit margin of $30 per barrer over the past year, $6 per
barrel higher than the average margin for a complex refinery in
the Mediterranean. Tupras said
    Moscow and Ankara are also discussing setting up a hub for
Russian gas in Turkey after the EU drastically reduced Russian
gas purchases. The plan plays into Ankara's long-held desire to
become a major energy distribution hub for southern Europe.
    Russia sees the hub as a way to re-route its gas exports
from Europe or sell some gas into the EU indirectly.

 (Editing by David Evans)