Kazakh Urals seduces refiners

The Kazakh Ural, renamed KEBCO in June, is finding favour with European refiners in the Mediterranean.

Partagez:

The Kazakh Urals is finding favour with European refiners in the Mediterranean. Renamed KEBCO in June to distinguish itself from its Russian counterpart under sanctions, it trades at high premiums.

Kazakh Urals renamed

There was no distinction between Kazakh and Russian Ural crude before the Russian-Ukrainian conflict began. In fact, both crudes had the Ural appellation. However, Ural crude became increasingly difficult to sell in Europe due to the sanctions.

In response, Kazakhstan announced on June 7 a change of name for the crude oil it exports. The Russian network Transneft will export, from now on, the Kazakh Urals under the name of Kazakhstan Export Blend Crude Oil (KEBCO). Thus, the name change comes in a context of sanctions targeting Russian exports to Europe.

The weight of sanctions

On June 3, the European Union adopted the sixth set of measures sanctioning Russian oil exports to Europe. Brussels bans Russian crude oil exports by sea to Europe from December 5. However, the European Union makes an exception if the oil loaded in Russia comes from a third country.

Kazakh Ural comes from the Uzen land deposit near the Caspian Sea. Thus, Kazakhstan exports this production via the Uzen-Atyrau-Samara pipeline. Finally, in Samara, the Kazakh Urals joins the Transneft network and mixes with Russian crude.

Modest volumes

The majority of the crude oil is heading south to the Black Sea port of Novorosiisk. The rest is exported to the north, to the port of Ust-Luga opening on the Gulf of Finland and the Baltic. However, the total volumes for the Kazakh Urals are modest, amounting to about 200,000 b/d.

Kazakh Urals contrasts with Kazakhstan’s flagship export crude, CPC Blend, which has a relatively light sweet grade. Loaded at Novorosiisk, approximately 1.5 million bpd of CPC Blend transits through a dedicated pipeline from the Caspian Sea. However, this volume, which includes a Russian part, continues to trade freely as if it came from a third country.

Volumes destined for Europe

The Kazakh Urals accounts for approximately 13% of the Urals’ exports each month. The state-owned company KazMunaiGaz (KMG) is allocated a proportional share of the total Ural loading program. In addition, only Vitol and KMG sell KEBCO, making it a relatively small and new market.

There is no publication of the Ural loading programs since June. However, Kpler’s data reveals an export pattern that supplies KEBCO primarily to Europe at the expense of Asia. Thus, in the last three months, about 90% of the Kazakh Ural cargoes were exported to European refineries.

KMG supplies Europe with crude oil

In June, six cargoes, representing 156,000 b/d of Kazakh Urals, were exported to Europe, except for one cargo. In July, 256,000 b/d of KEBCO were exported and all but two of the shipments were going to Europe. Finally, in August, seven cargoes, representing 174,000 b/d of KEBCO, left for Europe.

In contrast, in the three months from March to June, approximately one third of KMG shipments were exported to Europe. In fact, the majority of them supplied China, India, Turkey and the United Arab Emirates. However, these shipments contained Russian Urals due to the lack of distinction in the market.

New buyers

The nine shipments of KMG’s Ural to Europe between March and May fed the Romanian refinery Petromidia. Thus, Petromidia, owned by KMG, and the Italian refinery Milazzo received the largest number of cargoes from the Kazakh Urals. In addition, the Italian Falconara and Spanish Petronor refineries have also been purchasing cargoes since June.

The new Mediterranean players on the KEBCO market are evidence of the change in attitude towards the Kazakh Urals. Indeed, European buyers previously shunned crude from Kazakhstan. Nevertheless, some traders consider it expensive, as it is the same price as a Russian cargo before the Russian-Ukrainian conflict.

A reconfiguration of the market

The disappearance of the Urals from European refineries led buyers to purchase softer grades. Thus, margins were soaring for distillates. However, eroded margins, declining demand and high prices were driving Mediterranean refiners to other options.

Currently, former Asian importers from the Urals are turning away from this quality. Indeed, demand is decreasing and freight costs are increasing. Thus, in this context, the possibilities of negotiation for this quality are diminishing.

Faced with recurrent shortages, Zambia is reorganising its fuel supply chain, notably issuing licences for operating new tanker trucks and service stations to enhance national energy security and reduce external dependence.
The closure of the Grangemouth refinery has triggered a record increase in UK oil inventories, highlighting growing dependence on imports and an expanding deficit in domestic refining capacity.
Mexco Energy Corporation reports an annual net profit of $1.71mn, up 27%, driven by increased hydrocarbon production despite persistently weak natural gas prices in the Permian Basin.
S&P Global Ratings lowers Ecopetrol's global rating to BB following Colombia's sovereign downgrade, while Moody’s Investors Service confirms the group's Ba1 rating with a stable outlook.
The anticipated increase in the tax deduction rate may encourage independent refineries in Shandong to restart fuel oil imports, compensating for limited crude oil import quotas.
Petro-Victory Energy Corp. starts drilling of the AND-5 well in the Potiguar Basin, Brazil, as the first phase of an operation financed through its strategic partnership with Azevedo & Travassos Energia.
The Texan Port of Corpus Christi has completed major widening and deepening work designed to accommodate more supertankers, thus strengthening its strategic position in the US market for crude oil and liquefied natural gas exports.
BP Prudhoe Bay Royalty Trust is offering its interest in Prudhoe Bay, North America’s largest oil field, as part of its planned dissolution, assisted by RedOaks Energy Advisors for this strategic asset transaction.
CNOOC Limited’s Hong Kong subsidiary and KazMunayGas have concluded a nine-year exploration and production contract covering nine hundred and fifty-eight square kilometres in Kazakhstan, sharing investment and operations equally.
Donald Trump announced that the United States will no longer oppose Chinese purchases of Iranian oil, immediately triggering a drop in global crude oil prices and profoundly reshaping international energy trade partnerships.
Research firm S&P Global Commodity Insights lifts its outlook for the fourth straight year, betting on three point five mn barrels per day from 2025 despite lower prices.
Enbridge plans to expand its infrastructure to increase oil transportation from the American Midwest to the Gulf Coast, anticipating rising exports and addressing current market logistical constraints.
US commercial crude inventories significantly decline by 3.1 million barrels, widely surpassing initial forecasts and immediately pushing international oil prices higher.
The UK could have hydrocarbon reserves twice as large as current official estimates, according to Offshore Energies UK, highlighting the impact of fiscal policies on forecasts and the economic future of the North Sea.
Following US strikes in Iran, international energy companies partially evacuate their teams from Iraq as a precaution, while Lukoil maintains its entire personnel on southern oilfields.
Chinese independent refineries remain cautious amid rising Iranian crude prices driven by escalating Iran-Israel tensions, potentially threatening access to the strategic Strait of Hormuz.
Gazprom, affected by a historic $6.9bn loss in 2023, is offering Pakistani state-owned firm OGDCL its petroleum assets in Nigeria to strengthen its presence in Asia’s energy market, according to Pakistani sources.
Donald Trump urges control of oil prices following U.S. military action against Iranian nuclear facilities, amid escalating tensions around the strategic Strait of Hormuz, threatening to significantly impact global markets.
PermRock Royalty Trust announces a monthly distribution of $539,693 to unit holders, impacted by reduced oil volumes and prices in April, partly offset by increased natural gas sales.
Permian Basin Royalty Trust announces a reduced distribution for June due to ongoing excess costs at Waddell Ranch properties and lower volumes from Texas Royalty Properties.