Russia's largest oil company Rosneft supplied 43.1mn tonnes of oil to Asia in January-September 2018, beating exports to Europe that amounted to 41mn tonnes. Rosneft supplied 15.7mn tonnes to Asia in the third quarter alone, or half (48%) of its total exports, and 13.1mn tonnes to Europe (40% of total).
Asia has been growing in importance as a market for Russian oil since 2003, when the Kremlin took over the privately owned Yukos oil company. As bne IntelliNews has already reported Russia is reorienting its supplies of low sulphur oil from the West to China, which upset European refineries receiving Urals oil blend of poorer quality.
The gap between European and Asian supplies has been closed fast, as in 2017 still Europe imported 65.3bn tonnes of oil from Rosneft versus 47.7mn tonnes for Asia. China is the major buyer of Rosneft's oil (a business started by Yukos), with about 40mn tonnes supplied in 2017, that is slated to increase to 50mn tonnes this year.
After the landmark deal signed between Russia's largest oil company Rosneft and China National Petroleum Corporation (CNPC) in 2013, Rosneft has extended cooperation with CNPC and CEFC China Energy. Most recently the contract of troubled CEFC has been overtaken by CITIC Resources (a subsidiary of the Chinese government fund CITIC).
Analysts surveyed by Vedomosti confirm the trend of increased output by Rosneft in Eastern territories and focus on long-term supply deals and joint extraction ventures with Chinese and Indian companies. In the meantime the European market is stagnating due to lower economic growth, renewable energy policies, and transition to a service-driven economy.
This week bne IntelliNews reported that Rosneft gave a bullish capital expenditure guidance for 2019 as it prepares to boost output. However, the company is trying to shield itself from possible future sanctions by revising contracts with its major buyers. Previous reports suggested that Chinese banks have so far comploied with the sanctions imposed by the US and the EU against Russia.