Türkiye halves Russian oil purchases | News.az

Türkiye has halved its imports of Russian oil due to repairs at the STAR refinery near Izmir, with the figure falling to 200,000 barrels per day in August, News.Az reports citing RBC .

Turkey, the third-largest buyer of Russian oil, has halved its imports of raw materials from Russia amid repairs at the STAR oil refinery near Izmir, according to data from the analytical company Kpler. In August, the figure fell to just under 200 thousand barrels per day from 400-450 thousand barrels per day at the beginning of summer.

Repairs at the plant, which accounts for about 45% of all Russian oil supplied to the Turkish market, began on September 5. This is a planned event that will last about two months. Thus, purchases began to decline in anticipation of the production shutdown, Viktor Katona, head of oil market analysis at Kpler, explained to RBC.

The STAR refinery is operated by the Azerbaijani state oil company SOCAR. The enterprise was launched in October 2018, becoming the largest investment in the private sector in Turkey. The refinery, with an annual capacity of about 200,000 barrels per day (or 12 million tons of oil per year), meets about 20% of the country’s needs for petroleum products. By 2024, it was planned to increase the plant’s capacity to 13 million tons.

The most suitable grades of oil for the STAR refinery are heavy ones, in particular, it is focused on processing Azerbaijani Azeri Light, Iraqi Kerkuk and Russian Urals. Today, the main supplier of raw materials to the enterprise is LUKOIL, Reuters wrote in August. RBC sent a request to the company’s press service.

According to Kpler, if in June oil supplies from Russia to the Turkish port of Aliaga, where the STAR refinery is located, amounted to slightly less than 300 thousand barrels per day, then in August they fell to 100 thousand barrels per day. “Against this background, rumors intensified on the market that Chinese buyers began to be offered more batches of Urals in October, so it is quite possible that Urals exports to China, which were frankly weak during the summer months, will recover,” Katona says.

The expert adds that the situation is not critical for Russian suppliers, but is uncomfortable from the point of view of limited sales regions. “At the moment, Russia’s dependence on the Asian market is the highest in history; there are practically no buyers left in Europe, with the exception of Turkish Tupras,” he notes. In addition, this put slight pressure on the price of Urals, the discount on which in India rose to an average of about $4 per barrel against Brent, compared to $3 previously.

Repairs at the STAR refinery will have little impact on Russian exports in September-October, agrees Mikhail Zhuravlev, senior expert at the Economics Department of the Institute of Energy and Finance (IEF). “Rerouting 200-250 thousand barrels per day is not a difficult task for Russian exporters, especially given the flexible discount system. In the fall, the main factor influencing Russian exports from Western ports is the volume of refining,” he says. Zhuravlev believes that the lost volumes will likely be reoriented to the Indian market. In addition, “LUKOIL’s deliveries via Druzhba are expected to resume in October, which will also “rectify the balance.” In July, Ukraine, through which the oil pipeline passes, suspended LUKOIL deliveries. Hungary and Slovakia linked the restriction to the expansion of Ukrainian sanctions against the Russian company. However, in September, Hungary’s MOL settled the issue by concluding agreements with oil suppliers and pipeline operators, according to which the company becomes the owner of all volumes already on the Belarusian-Ukrainian border.

Among other factors that can support demand for Urals, the expert lists military actions in Lebanon and the postponement of OPEC+ production recovery by two months, until December. In particular, Israel’s military operation on Lebanese territory could again raise oil prices, which will emphasize the attractiveness of Urals. “The profitability of refineries in Asia is now very low, so importers are forced to count every penny, and discounted Urals along with Iranian and Venezuelan oil will be very useful,” concludes Zhuravlev.

News.Az