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01 Sept. 2020-MOSCOW: Kazakhstan sharply cut shipments of oil to China in July and August as it reduced output under the global producers’ pact and because of their low profitability compared with westward shipments through Russia, four industry sources told Reuters.
Exports of Kazakh crude to China fell to 12,100 tonnes in July, their lowest since March when shipments were hit by organic chloride contamination and down from 98,865 tonnes in June. August shipments stood at 10,000 tonnes as of Aug. 28.
Kazakhstan has cut its oil output under the global agreement of OPEC and non-OPEC producers, while recovering domestic demand for fuels after two COVID-19 lockdowns has further eaten into the amount of crude available for exports, traders say.
The Chinese route was profitable in the second quarter when demand and prices there were on the rise, according to traders, while one of Kazakhstan’s three refineries was on maintenance.But now it makes more sense for producers to ship their oil through Russia.
“Exports to China are $5-25 less profitable per tonne (in August) than through (the Russian port of) Ust-Luga,” one source said, while another said shipments through the Caspian Pipeline Consortium were the most profitable at the moment.
“All the storage facilities in China are full, they stocked up in April and May when prices fell,” a source said.At the same time, transit shipments of Russian crude have remained stable at around 800,000 tonnes per month, a source at major Chinese importer PetroChina said.