Saudi Arabia doubles Russian fuel oil imports in second quarter for power generation – Middle East Monitor

Saudi Arabia, the world’s largest oil exporter, more than doubled the amount of Russian fuel oil it imported in the second quarter to fuel power plants to meet summer cooling demand and free up clean Kingdom crude for export, according to data and traders, Reuters reports.

Russia has been selling fuel at cut prices after international sanctions over its invasion of Ukraine left it with fewer buyers. Moscow describes the war in Ukraine as a “special military operation”.

Rising sales of fuel oil, used in power generation, to Saudi Arabia show the challenge US President Joe Biden faces as his administration seeks to isolate Russia and cut its export revenues from ‘energy.

While many countries have banned or discouraged purchases from Russia, China, India and several countries in Africa and the Middle East have increased their imports.

Biden is due to visit Saudi Arabia later this week, when he is expected to seek increased oil supplies to global markets from the Kingdom to help bring down oil prices that have fueled inflation around the world. .

There is little spare capacity for Saudi Arabia and others to increase production in the short term. Saudi Arabia has also maintained its cooperation with Russia in the alliance of global producers known as OPEC+. The two are the de facto leaders respectively of OPEC and non-OPEC producers in this group.

Data obtained by Reuters Through Refinitiv Eikon vessel tracking, Saudi Arabia imported 647,000 tonnes (48,000 barrels per day) of fuel oil from Russia through Russian and Estonian ports in April-June this year. This was up from 320,000 tonnes in the same period a year ago.

For the year 2021, Saudi Arabia imported 1.05 million tons of Russian fuel oil.

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The Saudi and Russian energy ministries declined to comment on the increase in imports.

Saudi Arabia has been importing Russian fuel oil for several years, which may reduce its need to refine crude for its products and reduce the amount of oil it has to burn to generate electricity, leaving it with more crude unrefined to sell in international markets at higher prices.

The Kingdom turns to oil to meet electricity needs, which typically peak as cooling demand rises with summer temperatures. Some Saudi cities are far from natural gas deposits that could provide cleaner fuel for power generation.

The volume of crude burned is around 600,000 bpd during the summer months and 300,000 bpd during the winter months, according to figures from the Joint Organizations Data Initiative (JODI). Increased use of natural gas reduced the amount by 1 million bpd in 2010.

Hub in Fujairah

Saudi Arabia has also imported more Russian fuel oil through the Middle Eastern oil hub of Fujairah in the United Arab Emirates, traders said.

Fujairah has received 1.17 million tonnes of Russian fuel oil so far this year, according to ship tracking, compared to 0.9 million in the same period last year.

According to vessel tracking, another 0.9m tonnes could be delivered to Fujairah in July alone, bringing the total to 2.1m so far this year, topping 1.64m tonnes for all of 2021.

Much of Fujairah’s fuel oil is sold there as fuel for ships, but some is shipped to neighboring countries. It is unclear how much additional Russian fuel is flowing to Saudi Arabia via Fujairah.

Saudi Arabia expanded its refining capacity to 3.6 million bpd from 2.9 million in 2017.

Its refining utilization rates stood at 70%-73% in April-June of this year, despite production exceeding 10 million bpd.

This compares to 75%-95% during the same periods of 2017-2019, the last time its output was not severely reduced by the Organization of Petroleum Exporting and Allied Countries (OPEC+) production cuts. ).

Meanwhile, crude and product exports were at or near a record high of 9 million bpd in February-April, according to JODI figures, with crude exports alone at or near 7, 3 million bpd.

Edward N. Arrington