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Russian Oil Flow To Africa Up To 420,000 Barrels Daily In March

by Adejumoke Adeeso
2 years ago
in Business
Reading Time: 4 mins read
russian oil flow to africa
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Russia has increased its oil sales through Africa following sanctions from Western nations.

Russia’s refined product exports to Africa have skyrocketed since the invasion of Ukraine, increasing 14-fold in just over a year, following a diplomatic onslaught on the continent by Russian officials.

Prior to the war, Russia exported 33,000 b/d of refined products to Africa, much of it gasoline.

By March 2023, that had soared to 420,000 b/d. Illustrating the geopolitics at play, shipments to countries such as Nigeria, Tunisia, and Libya jumped sharply in February, when the European Union placed an embargo on Russian products.

The embargo followed independent decisions from many Western countries to halt imports of Russian oil.

These sanctions have forced Russia to redirect significant oil export volumes to alternative markets, including Africa. India, China, and Turkey are also becoming increasingly important export markets.

Experts said, a new ‘scramble for Africa’  has gathered pace since the invasion began early last year, with Russia, China, the US, Turkey, Gulf states, and former colonial powers Britain and France all vying for influence on the world’s fastest-growing continent.

Russia’s foreign minister, Sergei Lavrov, visited seven African countries in the space of a month last year in a bid to firm up ties with key countries and open up new markets for Russian oil products, independent Russia analyst Timur Kulakhmetov told S&P Global Commodity Insights.

Meanwhile, Russian mercenaries with the Wagner Group have provided security for African rulers in return for lucrative mining contracts, and Russian energy companies have eyed investments on the continent. At the United Nations General Assembly in March, 22 African countries refused to condemn Vladimir Putin’s full-scale invasion.

Perhaps the clearest evidence of strengthened ties is in Russian refined product exports since an EU embargo on imports of most Russian oil products came into force Feb. 5.

A G7, EU, and Australia price cap of $100/b on Russian products that typically trade at a premium to crude including gasoline and gasoil was introduced at the same time.

This left Moscow “struggling to keep a foothold in the raw materials ladder, by seeking new markets for commodity exports,” Kulakhmetov said.

A lower price cap of $45/b on petroleum products traded at a discount to crude oil came into force on the same date.

Although Russian refined product flows dipped slightly after the February 2022 invasion, they reached a seven-year high of 1.9 million b/d in March 2023.

And while shipments to European countries, like France and Belgium, have cratered in recent months, shipments to African countries—particularly northerly ones—have skyrocketed, particularly after the EU embargo on product imports came into force.

Russia was “a key product supplier to the European market before sanctions, especially of diesel, fuel oil, and naphtha,” said Rebeka Foley, senior analyst of near-term oil markets, at S&P Global.

“But the market has re-balanced—in light of sanctions, more Russian diesel has been heading to Africa, Turkey, the Middle East, and Latin America.”

In the first quarter of 2022, Tunisia imported just 2,700 b/d of Russian products, but that rose to 66,300 b/d in Q1 of this year, according to S&P Global Commodities at Sea data, while Nigeria—Africa’s biggest oil producer and most populous nation—saw imports rise almost five-fold year on year to 57,400 b/d in Q1 2023.

Morocco, Libya, and Egypt have also recorded huge rises in Russian imports. “[Lavrov’s] flurry of diplomatic activity makes it abundantly clear. These steps are about Russia seeking alternative routes for their commodity exports,” Kulakhmetov added. “Therefore, North African states are playing a significant role for Russia in mitigating implications of oil and oil product ban.”

At the heart of the new flows is Litasco, the Geneva-based trading arm of Russian oil company Lukoil, which has been active in Africa for decades. Western-owned Vitol and Guvnor have also continued shipping Russian products. In addition, trading entities in the UAE, Hong Kong, and Singapore have sprung up in recent months.

The reorientation of product flows has been aided by falling imports into Africa of Dutch gasoline after regulators in the Netherlands imposed new rules on sulfur, benzene, and manganese content for fuel exports.

 



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