"It's clear that something is moving from west to east," a trader said. Earlier in the day, Transneft Deputy Vice President Igor Katsal said Kozmino exports could rise to 25 million tonnes next year, including 21 million tonnes delivered to port by pipeline and up to 4 million tonnes by rail, without a year-on-year decrease in flows westward to Europe.
Exports from Kozmino are already up from year-ago levels as Transneft prepares to mark the expansion of the ESPO pipeline on December 25. The pipeline, which branches southward to the Chinese border at the town of Skovorodino, and was financed by a Chinese loan secured against future oil exports, is key to securing a share of growing Asian markets for Russian producers, who are major contributors to the state budget.
Its expansion coincides with a push by the Kremlin to focus state energy policy on developing resources for Asia as a defence against weak economies and sluggish demand in Europe, the main market for Russia's energy exports. Critics say its ambition is to be a swing producer, switching flows between Europe and Asia to maximise profit and geopolitical expedience. President Vladimir Putin goes to Brussels on Friday with an agenda that is likely to be dominated by energy issues.
With the Soviet-era production base in Western Siberia in decline, much of Russia's potential to sustain output is located in Arctic fields to the north east, as well as recently launched fields in eastern Siberia. Chief among them is state oil company Rosneft's Arctic Vankor field, which has been responsible for Russia's modest output growth this year. Katsal said that, with Vankor due to hit 25 million tonnes of production next year, up from 18 in 2012, exports of the pipeline's ESPO crude oil blend via the Pacific port of Kozmino could rise while exports via Western outlets would stay flat.
According to a loading schedule, seen by Reuters on Wednesday, total export and transit via the Transneft system to countries outside the former Soviet Union will fall by 1.6 percent to 53.96 million tonnes in the first quarter in absolute terms, with the biggest fall, of 20 percent, expected in the Baltic port of Ust-Luga.
On a daily basis, deliveries will increase slightly, by 0.6 percent, while Ust-Luga will decline by 18.2 percent. The first quarter is shorter than the fourth quarter. Kozmino, where oil has been delivered by a railway so far, will load 4.8 million tonnes, a rise of 37.7 percent in absolute terms and a 40.7 percent on a daily basis.
Some of Russia's eastern refineries are increasing the call on ESPO resources by seeking more crude from the expanded pipeline, but have yet to receive commitments of additional volumes that could detract from export. Transneft CEO Nikolai Tokarev said Rosneft's Komsomolsk refinery would not receive additional volumes next year. In comments to journalists on Wednesday, Transneft emphasised the grade's liquidity and quality as factors underpinning Russia's ambitions to see ESPO overtake Dubai crude as the benchmark for the pricing of Asian crude.