Key Russia oil grade sells out as Asia snaps up barrels

Shipments from Russia continue to find buyers despite Moscow facing more sanctions. PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Cargoes of Sokol crude from Russia's far east have sold out for next month in a sign that shipments from the nation continue to find buyers despite Moscow facing more sanctions for its war on Ukraine.

May-loading cargoes from the Sakhalin-I project will be delivered to buyers in Japan, South Korea, China and India on a spot or term basis, said traders who asked not to be named because the information is private. Sokol yields a lot of diesel and it can be shipped to nations in north Asia within a week.

Russian oil is still finding its way to willing buyers that either cannot resist the temptation of cheaper crude, or are struggling to find replacement barrels as many others seek alternatives to the key producer's supplies. The United States and its allies are planning a massive release of strategic reserves to soften the economic fallout of Russia's war on Ukraine, which is in its second month.

Japan's Sakhalin Oil and Gas Development Co, known as Sodeco, sold Sokol cargoes to a Japanese buyer as well as a South Korean refiner via a term deal, the traders said.

India's ONGC Videsh sold shipments to two Indian state-run refiners, they added. Both are equity partners in Sakhalin-I, alongside Russia's Rosneft and operator Exxon Mobil.

Trafigura Group, which Rosneft supplies with Sokol, sold cargoes to destinations including China's Shandong province, home to many of the nation's private refiners, the traders said. Exxon will use its share of Sokol in its own refineries, they added. A total of ten cargoes were said to be slated for May-loading.

Exxon is complying with all sanctions, spokesman Julie King said by e-mail. The company is meeting contractual commitments that were in place before any embargoes and Russian crude has been limited to pre-existing commitments, she added.

Sodeco and Trafigura declined to comment, while ONGC did not respond to an e-mail and a call seeking comment.

Traders said there have been offers to supply Russian ESPO crude, another grade that loads from the Russian far east, on a delivered basis to Shandong. Some sellers have even begun accepting renminbi to tempt more buyers who may be deterred by payment issues including the issuance of letters of credit.

Russia's flagship Urals crude, which is shipped from ports in the Baltic Sea and Black Sea, has also been making its way to India and China. That has led to the Biden administration warning India about aligning itself with Russia.

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