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Russian Oil Sector under Sanctions Pressure: Lessons of Survival

Russian Oil Sector under Sanctions Pressure: Lessons of Survival

The pressure of sanctions on the Russian oil industry is rising.

An embargo on seaborne oil supplies from Russia to the EU took effect on 5 December. Simultaneously into operation went the mechanism of a price cap invented by the US and supported by the G7 countries, the EU, Australia, Norway, and Switzerland.

Meanwhile, these are by no means the first sanctions introduced against the industry since the beginning of the special military operation. Suffice it to say that the price cap is part of what is already the eighth package of sanctions. The oil industry has faced not only export restrictions, but a ban on equipment supplies and withdrawal of Western partners from Russia.

The NESF report will enable summarising the first results of the oil industry’s response to the heavy sanctions and seeing how successful resistance to this pressure has been.

You will find the following subjects in the report:

Status of Russian oil production, including a regional breakdown

Dynamics of Russian oil exports broken down by:

Main ports and sales destinations
Supplies by pipeline as well as exports from Baltic, Arctic, Black Sea, and Pacific ports

New “safe havens” for Russian oil

Growth in sales to China and Turkey
Conquering the Indian market
Discounts: the other side of redirection

The price cap mechanism in the US, UK, and EU legislation

New sales logistics and infrastructure

Meeting Russian tanker requirements in the context of sanctions
Buying up old ships on the global market
Solution to the insurance problem
Techniques of “grey” sales: transshipment at sea and in “grey” ports

Russian oil refining during sanctions

How serious technological restrictions are for fuel production
Status of import substitution

Russian oilfield services industry since the introduction of sanctions

Role of Western companies in the Russian oilfield services market
Schemes of their withdrawal from Russia and actual implications

Future outlook

Contents of the report:

INTRODUCTION	3
RUSSIAN OIL PRODUCTION	5
DYNAMICS OF RUSSIAN SEABORNE OIL EXPORTS BROKEN DOWN BY MAIN PORTS AND DESTINATIONS	12
NEW ‘CENTRES OF ATTRACTION’ OF RUSSIAN OIL	20
Discounts as payment for new markets	20
China	25
India	32
Turkey	35
ANALYSIS OF US, UK, AND EU PROPOSALS FOR PRICE CAP ON RUSSIAN OIL EXPORTS	37
US	37
United Kingdom	38
EU	39
First Results of Price Cap Operation	40
MEETING RUSSIAN TANKER REQUIREMENTS IN CONTEXT OF SANCTIONS	43
RUSSIAN OIL REFINING DURING SANCTIONS	47
RUSSIAN OILFIELD SERVICES AFTER INTRODUCTION OF SANCTIONS	58
FUTURE OUTLOOK	64

Date of release:	February 6, 2023

If you are interested to obtain please contact » Elena Kim

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Analytical series “The Fuel and Energy Complex of Russia”:

State regulation of the oil and gas sector in 2023, 2024 outlook

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Gazprom in the period of expulsion from the European market. Possible evolution of the Russian gas market amid impediments to exports

The year 2023 saw an even larger drop in Russian exports of pipeline gas to Europe. In the past two years, Gazprom failed to export some 120 bcm of natural gas, and these quantities are now locked up in Russia. Another difficult case concerns extension of the current gas transit contract with Ukraine, which expires at the end of 2024. Gazprom is already looking for new opportunities.

New Logistics of Russian Oil Business

When the G7 and the EU as of 5 December 2022 imposed an embargo on oil from Russia and the price cap mechanism that was later complemented with the same measures against petroleum products, Western analysts confidently predicted inevitable collapse in Russian exports by at least one-third. The new report explains in detail how the mechanism of Russian oil transport and sales works and whether Western companies remain in this business.

Russia’s New Energy Strategy: on Paper and in Fact

The Energy Strategy to 2050 was originally supposed to be approved before 15 September 2022, yet it was never adopted even as of November 2023. Moreover, not even a draft of the ES 2050 has been published yet. On the one hand, this vividly demonstrates the attitude to strategic documents on energy. It turns out that the industry on the whole copes with the unprecedented pressure of sanctions even without official strategies. On the other hand, Russian oil and gas has been facing really serious challenges that cannot be taken lightly. And immediate problems are a reflection of long-term threats too.

Outlook for Russian LNG Industry

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All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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