Russia’s refineries have processed less crude in May due to seasonal maintenance, but the drop in supplies to the facilities was too small to provide concrete evidence that the country has fully implemented its pledged production cuts.
The Kremlin said it would reduce crude production by 500,000 barrels a day from February levels to support oil prices. Deputy Prime Minister Alexander Novak has said that target was achieved this month, but since the nation’s oil statistics were classified it has been difficult to assess output levels beyond official assurances.
Surging oil exports from Russian ports have cast doubt on these claims, with the International Energy Agency estimating last week that the country has made less than half the pledged curbs.
Russian refineries cut their average daily throughput to 5.34 million barrels from May 1-17, according to a person familiar with the data. That’s a decline of some 372,000 barrels a day from February levels, Bloomberg calculations show.
Yet Russian producers seem to be rerouting overseas the crude volumes that are not being processed domestically. The country’s average seaborne oil flows so far in May were about 400,000 barrels a day higher than in February, according to tanker-tracking data compiled by Bloomberg.
Russia does appear to be exporting less crude via pipelines. Official statistics are classified, but the Organization of Petroleum Exporting Countries estimated that the country’s deliveries via the Druzhba link and to China via the ESPO conduit dropped by a combined 60,000 barrels a day in March from February levels.
If May pipeline deliveries remained flat, the balance between the exports to key foreign clients and domestic processing implies a net output decline of just about 30,000 barrels a day so far this month from February, Bloomberg calculations show.
The calculations don’t take into account Russian oil deliveries to China via Kazakhstan under long-term contracts, as well as pipeline and railway supplies to neighboring countries, mainly Belarus. While Minsk also keeps its oil statistics confidential, a recent Kpler research note estimates that “in April-May, there was very little room to maximize Belarusian refinery runs.”
It’s possible that Russia’s production could be lower if seaborne exports are being kept high by tapping inventories at oil fields and refineries, reservoirs in ports and along the pipeline network, as Rystad Energy estimated. Russian producers could have withdrawn some 400,000 barrels from the stockpiles in April and a further 200,000 barrels a day in May to sustain 3.7 million barrels a day of crude shipments from ports, according to the research firm.
Russia does not publish its oil-storage statistics.
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