Russian Urals producers face uneconomical exports
Exporting Urals grade crude by sea from Russia has become uneconomical for producers, at least on paper, after outright prices dropped sharply yesterday.
Faced with a saturated domestic market and now with negative netbacks, producers could be incentivised to shut-in output when the Opec+ agreement comes into force next month, or even sooner. But, a drop in Russia's crude export duty next month may alleviate the situation.
Netbacks for crude loading for export at the Russian Baltic Sea ports of Primorsk and Ust-Luga, to Nizhnevartovsk in west Siberia, fell to -$18.57/t ($2.58/bl) and -$17.90/t, respectively. This is based on the fact that the combined cost of delivery through the Transneft pipeline system, transshipment at terminals and export duty exceeds prices at the ports. The netback for supplies to the Black Sea port of Novorossiysk fell to -$13.11/t. Netbacks for ESPO Blend supplies to the far east port of Kozmino remain positive, at $73/t.
These changes follow falls in outright prices yesterday. In northwest Europe, Urals fell by $5.92/bl to $11.59/bl on a cif Rotterdam basis, and in the Mediterranean 80,000t Urals cargo prices dropped by $5.17/bl to $12.09/bl, cif Augusta, the lowest since March 1999.
The negative netbacks are partly accounted for by the fact that Russia's April export duty of $52/t is based on 15 February-14 March prices. In May, the export duty will fall to just $6.8/t.
Baltic and Black Sea netbacks also turned negative when prices slumped between March 30 and April 1.
Under the Opec+ agreement, Russia is committed to reducing production by 2.5mn b/d in May-June from the agreed baseline level of 11mn b/d and then by 2mn b/d from July to December.
By Diana Mukhametzyanova
source: Argus Media
Top News
Six last month
MinRes halts Bald Hill mine amid lithium price rout
Iran Alloy Steel Company intends to purchase 150 tons of Low-Carbon Ferro Manganese through public tender
Gold price faces worst week since 2021 as Fed signals no rate-cut rush
Iran Alloy Steel Company intends to purchase 12 tons of ferrotungsten through public tender
Swapping aluminum for copper will maintain China’s resources, group says
Gold loses some luster after Trump’s decisive win
Hedge funds slash bullish wagers on gold over Trump election win
Iron ore price flirts with key $100/t level on firm demand, China stimulus hopes
Families gather at South African mine shaft where hundreds are feared stuck underground
BHP to spend up to $14 billion on Chilean copper expansion
Chile’s rare salt flat fish faces threat from lithium mining project
British Columbia creates new mining ministry to tackle critical minerals amid doubts over capacity
China’s germanium, gallium ban could cost the US $3.4 billion
South Africa police standoff with illegal gold miners escalates
Iran Alloy Steel Company intends to purchase 150 tons of Low-Carbon Ferro Manganese through public tender
Iran Alloy Steel Company intends to purchase 12 tons of ferrotungsten through public tender
Iron ore price flirts with key $100/t level on firm demand, China stimulus hopes
Newmont sells Ontario gold mine to Orla for $850 million
BHP warns Australian mining not ready for low-cost competitors
Iran Alloy Steel Company intends to purchase 12 tons of ferrotungsten through public tender
Iran Alloy Steel Company intends to purchase 150 tons of Low-Carbon Ferro Manganese through public tender
Chile’s rare salt flat fish faces threat from lithium mining project
British Columbia creates new mining ministry to tackle critical minerals amid doubts over capacity
Newmont sells Ontario gold mine to Orla for $850 million
BHP warns Australian mining not ready for low-cost competitors
Resolute Mining says it will pay Mali $160 million in tax dispute
Trump chooses oil fracking boss as energy secretary
Gold loses some luster after Trump’s decisive win
