Vitol and Unipec are sending about 700,000 tonnes of contaminated Russian oil to Asia, in order to place the barrels rejected by buyers in Europe, Reuters reported citing trading sources and ship tracking data.
Namely, a Russian pipeline to Europe and a major port Ust-Luga have been contaminated with organic chloride, which can lead to damages to refining equipment. For this reason, Russia had to reduce exports.
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However, Reuters reported that Vitol and Unipec are targeting Chinese independent refiners, or teapots, which are interested in taking the oil. Namely, Chinese refiners have been shown cargoes of Urals crude that include organic chloride varying from 30-50 parts per million (ppm) to 200 ppm without mentioning prices.
However, buyers are treading with caution as the contaminated Urals crude must be stored in tanks and diluted multiple times with clean oil to reduce the organic chloride content, so as to prevent damage refining equipment.
On the other hand, European traders are not too keen on buying the fuel, even if it is offered at a discount of $10-20 per barrel. In fact, a European buyer specifically said that refiners do not want to touch it, as they were hurt in the past because of chloride issues.
Currently, about 11 million barrels of contaminated Urals are heading to Asia, after being exported from the Baltic port of Ust Luga in the past weeks.
