Experts: Russia is not losing market share of oil, despite the dumping of Saudi Arabia


MOSCOW, October 20. /Corr. Maria Todorova, Nikita Zharkov/. Russia does not lose the proportion of the global oil market, despite the decline in prices by Saudi Arabia to its customers. This opinion was expressed by the interviewed experts.

During the forum “Russia calls!” the President of “Rosneft” Igor Sechin said that Saudi Arabia is “active damping” to the oil price, came out even on the Polish market. Then Minister of energy Alexander Novak has accused Saudi Arabia to “fierce competition” in the markets. However, experts believe that this “dumping” – the reaction of Saudi Arabia on Russia’s actions in China.

Russia may become the largest exporter of oil to China, against this background, Saudi Arabia is beginning to work more actively on the European market. “Russia increased its oil exports for the first 9 months, we have seriously increased its presence on international markets. In particular, is chosen to become the main exporter of oil to China and increase exports to traditional markets”, – said the analyst of Gazprombank Alexander Nazarov. The export of Russian oil rose for the first 9 months of 2015 at 13.1 million tons, or by 7.8% and amounted to 180,9 million tons, while oil production in Russia has increased for 9 months of 2015, a total of 1.3%, or 5.4 million tons, to 398,5 million tons.

Currently Rosneft supplies oil to China under long-term contract with the state company CNPC. In February of this year, Sechin said that oil supplies in the framework of contracts on pre-export financing in the Eastern direction is expected to reach 32 million tons (an increase of 30% compared to 2014) including supplies to China planned at the level of 29 million tons (an increase of 27% compared with 2014).

“Rosneft” following the results of January-July 2015 exported 78,63 million tons of oil and oil products, the value of exports amounted to $33,19 MLR. Including for export to China sent 19% of this amount.

Lower prices the Saudis are not the trend

Nazarov from Gazprombank believes that the reduction of prices by Saudi Arabia to buyers “not proactive, but reactive”. Also, according to the analyst, this one-time event. “While this is not a trend. In order to conclude that this trend, it is necessary that these phenomena were repeated, preferably over several months”, – said Nazarov.

“Russia moved to Saudi Arabia in China at the expense of oil supply under direct contracts it is such a Alaverdy from them in Europe,” he agreed with a colleague UBS analyst Maxim Moshkov. In his view, the risks for Russia, certainly, are present, “because the market is oversaturated”. “But you need to look at the quality of the oil. European refineries were originally designed to process Russian Urals oil, respectively, is the main limitation. The quality of the oil are very different, and for refineries is very important”, – said Moshkov.

The President of the Foundation “Institute for energy and Finance” Vladimir Feigin said that Saudi Arabia pursued a similar policy on prices and on the Chinese market. “They tried to dump in China. They increase the supply, so we have the supplies to place it. Here they are trying to place, for example in Europe. That is, where there is no long-term contracts. In China they did not work, because there are long-term relationships, including with “Rosneft”, – said Feigin.

In his opinion, this policy is “inconsistent” and “has no prospects”.

Experts believe that the actions of Saudi Arabia to lower prices for buyers have some influence on oil prices. “If they do certain discounts and are fighting for markets, that is, of course, affects world prices. The oil market is globally quite replaceable, changing, of course, the cost of transportation, but it is not critical. When they make up – this is critical, as they affect oil prices in General throughout the global market, not specifically in Poland,” said Raiffeisenbank analyst Andrei Polishchuk.

Poland buys 90% of oil in Russia

Media reported that the first shipment of Saudi oil came to the Polish port of Gdansk on September 21. The oil was sold at a price much lower than Russian Urals.

But Poland gets the bulk of the oil from Russia via the Druzhba pipeline. Share in 93-95% of Russian oil imports of Poland is not changed for many years. In 2013, oil imports to Poland amounted to 24.3 million tons, of which 93.5 per cent of the Russian Federation, in 2014 is 23.7 million tons. Poland imported in the first quarter of 2015 about 5.5 million tons of oil.

“Rosneft” carries out deliveries of oil to Poland along the Druzhba pipeline on a permanent basis since early 2005 in the framework of quarterly export schedules issued by the Ministry of energy of the Russian Federation. The current supply contract signed on 1 February 2013. This contract provides for the delivery of about 18 mln tons of oil in the period until 31 January 2016.

“What happens is Saudi Arabia in Poland against Russia is a special case,” said Sberbank CIB analyst Valery Nesterov. According to Polishchuk from Raiffeisenbank, Saudi Arabia “to provide Poland with hardly more profitable than in China”.

Nesterov added that “Russia in its struggle for markets, which is now exacerbated, of course, will use its advantage in that it has well developed infrastructure for oil supplies in Europe.” “This new, modern ports, new pipelines. This allows to effectively and with price discounts to export oil. While we are quite competitive. About the big fears I wouldn’t say it,” – said the analyst.