Russian marine fuel sales declined by 20 per cent to about 2.4mn t in the first half of the year, from 3.1mn t during the same period last year, but demand was mixed at the different coasts.
Overall Russian demand fell amid strong price competition from other international ports, tighter product availabilities and adverse weather at some ports. Low vessel traffic because of the ongoing Covid-19 pandemic also cut into sales.
Russian Far East ports bunker sales declined by 40 per cent to about 700,000t. The Russian far east very-low sulphur fuel oil (VLSFO) discount to the competing port of Singapore narrowed to an average of $5.50/t in March, according to Argus’ assessments, compared with a discount of $23/t in March 2020, on limited supply. Two refiners and their subsidiaries, major bunker suppliers in the region, Rosneft and NNK-Primornefteproduct, conducted seasonal maintenance at the same time in March, instead of a typical staggered schedule to avoid deficits.
In the Russian Far East ports suppliers sold about 415,000t of VLSFO and about 130,000t of marine gasoil (MGO) in the first half of the year.
In ports on the Russian Black Sea bunker sales were down by 25pc to about 600,000t in the first half of the year as frequent storms in the region dampened local demand.
By contrast Russian Baltic Sea ports bunker sales were up by 6pc to about 850,000t, driven by higher demand for high-sulphur fuel oil (HSFO) from vessels with scrubbers installed.
Market participants estimated HSFO demand in the region at about 160,000t in the first half of the year. Suppliers also noted higher demand for residual fuel oil with 0.1 per cent sulphur, or ultra-low-sulphur fuel oil (ULSFO), which can be burned in lieu of 0.1pc sulphur MGO in the Baltic Sea. The Baltic Sea is designated as Emission Control Area (ECA) where the marine fuel sulphur limit is capped at 0.1pc by the EU.
Argus assessed the ULSFO to MGO discount at an average of -$32.9/t and -$33.0/t in the Russian Baltic Sea ports of St Petersburg and Ust-Luga, respectively, in the first half of the year.
Russian sales in the northern ports of Arkhangelsk on the White Sea and Murmansk on the Barents Sea were flat at about 290,000t. MGO demand there was lower but VLSFO demand made up for it. Bunkering companies were not willing to reduce their MGO indications citing tight MGO stocks and high transportation costs from local refineries to the ports.