Russian crude exports will reach a multiyear high of 5.7 million b/d in April, 400,000 b/d higher than average exports in the previous 5 months. The jump in exports will encourage more long-haul shipment of Russian crude from European ports to Asia. Extended maintenance at Tuapse, which will result in the loss of an unusually high 600,000 b/d of distillation capacity in April, has triggered these high exports.
Deep Maintenance Frees up More Crude for Export
Russia’s domestic crude demand will fall to an estimated 5.3 million b/d in April, down from a pre-maintenance level of 5.8 million b/d this past winter. The unplanned extension of maintenance is the reason for the unusually big decrease in throughput. Officials are unclear about the reason, but reports indicate it will not resume operations until the end of April. During peak maintenance periods, 400,000 b/d or more of distillation capacity is taken offline. In April 2019, however, the figure will be closer to 600,000 b/d. By comparison, during the upcoming fall turnaround season, ESAI Energy estimates that no more than 300,000 b/d of capacity will be offline at any one time.
As the chart shows, the decrease will cause Russia’s overall crude exports to reach a multiyear high of 5.7 million b/d, according to ESAI Energy estimates. The biggest impact will be on waterborne Urals outflows. Russia’s main seaborne exports of Urals, which were an average 1.9 million b/d in November-February and climbed to 2.1 million b/d in March, will be closer to 2.3 million b/d in April.
As recently described in CIS Watch, high Russian Urals exports from European ports tend to lead to the diversion of more long-haul deliveries of Russian crude to Asia. This month will be no different. The irony is that Russia’s crude exports will be so high just as producers come into compliance with their OPEC+ obligations.