London +4420 814 42225
Moscow +7495 543 9194
Kiev +38044 599 2950

Our Clients

Order Informer

Home > News >

Russian oil supplies via Druzhba pipeline set to shrink as EU refiners cut output

April 03/2020

MOSCOW (MRC) -- European refiners have requested less Russian oil via the Druzhba pipeline for April as they cut output due to sharp falls in demand for fuel amid the coronavirus outbreak, reported Reuters with reference to four traders.

The Druzhba pipeline, which can pump 1 million barrels per day (bpd), connects Russian oil fields with refinery plants in Germany, Poland, Czech Republic, Hungary and Slovakia.

Refiners in Eastern Europe connected to the Druzhba pipeline, including Total’s Leuna refinery in Germany and Rosneft’s Schwedt as well as Poland’s PKN Orlen and Mol’s Slovnaft, have cut their runs in the last two weeks by 20-30% from normal throughput, which resulted in lower purchases of oil via the pipeline, traders said.

‘Now 20-30% run cuts are ‘norma’ for most of refineries in Europe. Wonder how it will look in May’, a trader with a major said.

Total and MOL Group declined requests to comment on the figures. MOL added that ‘group refineries are running to ensure the safe supply of their operating countries’.

PKN Orlen and Rosneft did not respond to requests for comment.

Germany and Poland, both connected to the northern Druzhba route, have been in quarantine for several weeks now, which resulted in a sharp fall in demand for oil products, traders said.

The Schwedt refinery owned by Russia’s Rosneft has cut runs by some 70,000 bpd, nearly third of its capacity, according to two traders.

Total’s 241,000-barrel-per-day Leuna refinery cut its production by some 25%, another market source familiar with the cut told Reuters.

According to the sources both refineries cut their request for April by 100,000-200,000 tonnes from normal intake.

Poland’s PKN Orlen refinery in Plock has also decreased runs by 25%, two traders familiar with the refining data said. It was not clear if PKN Orlen adjusted its requests for Urals supplies via Druzhba in April. At the same time PKN refused to purchase extra Saudi crude oil for April loading.

‘We are all running as low as we can to operate normally, but to produce less’, a source with a major oil refinery in Europe said.

Hungary’s Mol, which receives oil via southern route of Druzhba pipeline, cut its oil purchases by some 30% from its normal level for its refineries in Hungary and Slovakia for April, two industry sources said.

“They bought some 200,000 tonnes less for April than we expected. It was not a dramatic slash, but lower,” one of the sources said.

Traders said that although April looks more or less understandable in terms of oil placement, they are bracing themselves for May as the spread of the virus suggests more production cuts by the refineries, while oil supply is only expected to rise.

“We are watching fuel sales closely. If they fall more, we’ll have to consider turning off one of the CDU (crude distillation) units,” a source with a European refiner which buys Urals told Reuters.

As MRC reported before, Total is evaluating new gas cracker project in South Korea as part of petchems growth strategy.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 215,390 tonnes in the first month of 2020, up by 23% year on year. Shipments of all grades of high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) increased due to higher capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 127,240 tonnes in January 2020, up by 33% year on year. ZapSibNeftekhim's homopolymer PP accounted for the main increase in shipments.
Author:Margaret Volkova
Tags:Europe, crude and gaz condensate, PKN Orlen, Total Petrochemicals, Russia.
Category:General News
| More

Leave a comment

MRC help


 All News   News subscribe