More Indian firms are attracted to buying Russian naphtha as low-cost feedstock for their refineries and petrochemical plants after price caps imposed by Western nations, six refining sources said, said Hydrocarbonprocessing.
Prices for refined products such as naphtha and fuel oil are capped at USD45/bbl by the Group of Seven nations, the European Union, and Australia in a scheme aimed at curbing Moscow funding its war against Ukraine. By comparison, Singapore naphtha traded at USD80.03/bbl on Tuesday on a free on board basis. The price cap was implemented along with an EU ban on Russian oil products imports on Feb. 5.
India's interest in ramping up Russian oil products imports comes after the world's third largest crude importer became Moscow's top oil client after China as the West shunned supplies from Moscow. Cheap Russian crude has shaved costs at Indian refiners and boosted margins. Reliance Industries Ltd. boosted its imports of Russian naphtha imports in February to about 222,000 t, ship tracking data from Refinitiv showed.
Reliance began importing Russian naphtha in September and by the end of January had shipped in about 217,000 t, the data showed. Reliance, already India's largest buyer of Russian naphtha and fuel oil, would consider increasing imports further, one of the sources said.
Its Russian fuel oil imports are set to triple a record of around 4.8 MMt between April 2022 and Feb. 2023, the first 11 months of this financial year, from about 1.6 MMt in 2021/22, Refinitiv Eikon data showed. State-owned refiners Bharat Petroleum Corp. and Indian Oil Corp., which have petrochemical facilities, are also looking for opportunities to buy Russian naphtha, sources said.
"So far there is no offer made to us for Russian oil. It is early days..we will definitely buy Russian naphtha if we get it at cheaper rate," said an official at one of the state refiners. Haldia Petrochemicals Ltd would also consider buying Russian naphtha if the quality and cost are suitable for its plants, two sources at the company said.
Reliance, IOC, BPCL and Haldia Petrochemicals did not respond to Reuters' emails seeking comment. The G7 price caps prohibit Western insurance, shipping and other companies from financing, insuring, trading, brokering or carrying cargoes of Russian crude and oil products unless they were bought at or below the set price caps.
We remind, Russia has diverted its diesel export supplies to Africa and Asia, as well for ship-to-ship (STS) loadings in February, as embargo closed the European markets for Russian-origin fuel, according to traders and Refinitiv data.
Russia has long been the main diesel supplier for Europe, where refineries do not produce enough fuel to meet domestic demand from its large diesel car fleet. A full EU embargo on Russian oil products went into effect on Feb. 5.
mrchub.com