Exclusive: Russia’s Rosneft finds extended oil cuts painful

© Reuters. A view shows a helmet with the logo of Rosneft company in Vung Tau


By Olga Yagova, Olesya Astakhova and Gleb Gorodyankin

MOSCOW (Reuters) – Rosneft (MM:) does not have enough crude to ship to buyers with which it has long-term supply deals, making it hard for the Russian company to continue with record oil cuts beyond June, four sources familiar with the matter told Reuters on Thursday.

Rosneft has told the energy ministry it would be difficult to maintain cuts to the end of the year, as it has had to cut shipments to major buyers, such as Glencore (L:) and Trafigura, despite good demand, two sources close to the talks said on condition of anonymity.

“There is no doubt Rosneft will strictly fulfil all obligations under supply contracts with its foreign and Russian counterparties despite output cuts made by the company as a part of OPEC+ deal,” Rosneft CEO Igor Sechin said in a statement on Friday.

Glencore and Trafigura declined to comment. Russia’s Energy Ministry did not respond to Reuters’ request for comment.

President Vladimir Putin, who decides on oil policy, spoke with Saudi Crown Prince Mohammed bin Salman on Wednesday about “close coordination” on output cuts, agreed in April to tackle oil market weakness because of the coronavirus pandemic.

Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries, proposes to extend the record cuts until December.

“Rosneft is in pain… They must supply refineries, term buyers. There are simply no resources,” a source familiar with Rosneft’s operations told Reuters.

Rosneft, run by one of Putin’s closest allies, Igor Sechin, has long opposed output cuts in tandem with OPEC, but has been overruled by the president, who is keep to deepen political cooperation with the Middle East.

The company, which sells mostly to long-term buyers, has cut output by 17% so far in May versus April, a source familiar with daily output data said.

It will export 800,000 tonnes in 8 cargoes from Baltic ports in June compared to 27 cargoes in April and 13 in May even though buyers wanted more oil as demand recovers in Europe and the value of Russian crude Urals has strengthened.

Glencore, which has a 5-year supply deal with Rosneft, will get two Baltic cargoes in June compared to eight in April. Trafigura will get one compared to ten.

The remaining five June cargoes of Urals were allocated to Total (PA:) and Gunvor – the winners of Rosneft’s 6-month tender for April-September loading. The volumes are the minimum under tender terms.

Rosneft also exports from the Black Sea (NYSE:) and the Pacific and could compensate buyers on those routes or in the Baltic in the future, the sources said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

{n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments)};
s.parentNode.insertBefore(t,s)}(window, document,’script’,
fbq(‘init’, ‘751110881643258’);
fbq(‘track’, ‘PageView’);

by : Reuters

Source link

Capital Media

Read Previous

L’américain Carlyle jette l’éponge en Afrique subsaharienne et transmet son fonds dédié à cette région à des ex-employés

Read Next

Why Americans are tiring of social distancing and hand-washing – 2 behavioral scientists explain