Europe Hopes Latest Limit on Russian Energy Is a Nonevent --- Inflation worries brew as EU cuts off more imports from Moscow

"Europe is weaning itself off Russian oil and gas in steps. The next phase, targeting oil products such as diesel and jet fuel, could bring fresh snags for buyers and fat profits for refiners.

This weekend, the European Union stopped importing petroleum products from Russia. This follows a ban on shipments of crude oil that came in early December, and before that, August's coal embargo.

The crude ban was a nonevent, despite some trepidation. Instead of reducing global supply and causing prices to rise, Russian oil that used to go to the EU was rerouted to India and China. A similar reshuffle may now happen for refined products and Russian fuel destined for Europe will instead flow to Latin America and Africa.

However, the market doesn't look as prepared for this ban as it was for crude, particularly for diesel. Europe gets over half its diesel imports from Russia, and so far, little has been redirected. Two weeks before the crude-oil embargo deadline on Dec. 5, around 50% of flows to Europe had already been rerouted, which minimized disruption when the ban kicked in. Two weeks ago, only 10% of diesel flows had found a new home, based on a Goldman Sachs analysis.

It could be a sign that it is physically more difficult to find new markets for refined-oil products than for crude.

"Russian diesel will need to travel much further," says Alan Gelder, vice president of refining at consulting firm Wood Mackenzie. "If there is a constraint, it will be in shipping."

While the Kremlin has been able to use the unofficial fleet that transports the oil of sanctioned countries such as Iran, there isn't the same kind of network for petroleum products.

Europe's diesel crack spreads, which track the difference between the price of crude oil and the cost of diesel, have been volatile lately. The spread is currently around $33 a barrel, down from $48 late last month. The fall in recent days may be a sign that traders don't expect the ban to be as disruptive as feared, but crack spreads are still more than double the levels before the latest round of sanctions, based on data from S&P Global.

If Russian diesel can't make it to new markets, freeing up other supplies for Europe, a shortage would cause another bout of energy inflation for European consumers. As EU environmental regulations motivated diesel vehicles for years, roughly 40% of the passenger cars on European roads run on the fuel, compared with less than 10% in the U.S., where diesel is mainly used for industrial transport. Jet fuel also may become more expensive.

In this scenario, the winners would be refiners that already enjoyed bumper profits last year. Stocks such as Tupras and Saras have gained 11% and 28%, respectively, this year as investors anticipate fat margins. U.S.-based refiners like Valero also would benefit, particularly as they have lower energy bills than their European competitors. Europe's integrated oil majors such as Shell and BP don't typically have much exposure to refining, although Spain's Repsol is an exception, with about 30% of its earnings coming from the activity.

Almost a year after the unprecedented sanctions on Russia began, the EU is making progress with its Russian energy detox -- although, ironically, it is buying more liquefied natural gas than ever from the country to replace the pipeline flows the sanctions shut off last summer. Hopefully for the global economy, the region will respond as well to the latest stress test as it did to the last one. If it doesn't, refiners can offer investors a hedge.” [1]

 

In that case, buyers will be left with even emptier pockets and hungrier.

 

1.  Europe Hopes Latest Limit on Russian Energy Is a Nonevent --- Inflation worries brew as EU cuts off more imports from Moscow
Ryan, Carol.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 06 Feb 2023: B.10.

 

Kinija aprūpina Maskvos karines pastangas Ukrainoje

„Vašingtonas – Kinija teikia technologijas, kurių reikia Maskvos karinėms reikmėms, nepaisant tarptautinio sankcijų ir eksporto kontrolės kordono, teigiama „Wall Street Journal“ Rusijos muitinės duomenų apžvalgoje.

 

     Muitinės įrašai rodo, kad Kinijos valstybinės gynybos įmonės siunčia navigacijos įrangą, elektroninio trukdymo technologijas ir reaktyvinių naikintuvų dalis Rusijos vyriausybei priklausančioms gynybos įmonėms, kurioms taikomos sankcijos.

 

     Remiantis muitinės įrašais, kuriuos žurnalui pateikė Vašingtono C4ADS, tai tik keletas dešimčių tūkstančių siuntų dvejopo naudojimo prekių – produktų, kuriems yra tiek komerciniai, tiek kariniai tikslai. C4ADS yra ne pelno siekianti organizacija, kurios specializacija yra nacionalinio saugumo grėsmių nustatymas. Dauguma dvejopo naudojimo siuntų buvo iš Kinijos, rodo įrašai.

 

     Rusijos užsienio reikalų, gynybos ir ekonomikos ministerijos į prašymus komentuoti neatsakė. "Rusija turi pakankamai technologinio potencialo užtikrinti savo saugumą ir vykdyti specialiąją karinę operaciją. Šis potencialas nuolat tobulinamas", – sakė Kremliaus atstovas Dmitrijus Peskovas.

 

     Nors Rusija gali patenkinti didžiąją dalį savo pagrindinių karinių poreikių šalies viduje, ji labai priklauso nuo dvejopo naudojimo technologijų, pavyzdžiui, puslaidininkių, būtinų šiuolaikinei kariuomenei, importo.

 

     Vakarų pareigūnai teigė, kad pernai vasarį pradėta jų ekonominio spaudimo kampanija sužlugdys Maskvą, nukreipdama sankcijas į šį eksportą į Rusiją, įskaitant kompiuterių lustus, infraraudonųjų spindulių kameras ir radarų įrangą.

 

     Tačiau muitinės ir įmonių įrašai rodo, kad Rusija vis dar gali importuoti šią technologiją per šalis, kurios neprisijungė prie JAV vadovaujamų pastangų atkirsti Maskvą nuo pasaulinių rinkų. Daugelis kontroliuojamų eksporto produktų vis dar teka per tokias šalis, kaip Turkija ir Jungtiniai Arabų Emyratai, kurių vyriausybes Vakarų pareigūnai kaltina nesilaikant sankcijų ir kontrolės. Turkijos pareigūnai teigė, kad sankcijos yra neveiksmingos ir kad Ankara vaidina svarbų vaidmenį, kaip pašnekovė su Rusija. Spaudžiama JAV, Turkija nusprendė nutraukti kai kuriuos finansinius ir verslo ryšius.

 

     JAE Ambasada Vašingtone nekomentavo.

 

     Tačiau žurnalo peržiūrėti įrašai rodo, kad Kinijos įmonės – tiek valstybinės, tiek privačios – yra dominuojančios dvejopo naudojimo prekių eksportuotojos, kurios, pasak JAV pareigūnų, kelia ypatingą susirūpinimą.

 

     Žurnalas išanalizavo daugiau, nei 84 000 siuntų, kurias užregistravo Rusijos muitinė per laikotarpį po to, kai Vakarai pradėjo ekonominio spaudimo kampaniją, kuri buvo skirta prekėms, kurias Bideno administracija pažymėjo, kaip svarbias Rusijos kariuomenei.

 

     Oficialiuose Rusijos muitinės įrašuose, kuriuose, pasak C4ADS, gali nebūti visų įrašų, išsamiai nurodoma kiekviena siunta į šalį, pateikiamos datos, siuntėjai, gavėjai, pirkėjai, adresai ir produktų aprašymai.

 

     Žurnalas taip pat iš įrašų nustatė daugiau, nei tuziną, Rusijos ir Kinijos įmonių, į kurias JAV taikosi pagal Rusijos spaudimo kampaniją, taip pat visas kitas sankcijų programas.

 

     Pramonės ir vyriausybės pareigūnai teigė, kad duomenys yra rimtas įrodymas, kaip Rusija gali apeiti pagrindinį Vakarų atsako Rusijai elementą.

 

     „Nepaisant tarptautinio patikrinimo ir sankcijų protokolų, patikimi pasaulinės prekybos duomenys rodo, kad Kinijos valstybinės gynybos įmonės ir toliau siunčia karinėms reikmėms tinkamas dalis Rusijos gynybos įmonėms, kurioms taikomos sankcijos“, – sakė C4ADS analitikė Naomi Garcia.

 

     „Įtarimas, kad Kinija teikia „pagalbą“ Rusijai, neturi faktinio pagrindo, bet yra grynai spekuliatyvus ir sąmoningai išgarsintas“, – žurnalui sakė Liu Pengyu, Kinijos ambasados Vašingtone atstovas. [1]

1.  World News: Chinese Supplies Fuel Moscow's Ukraine Military Effort
Talley, Ian; DeBarros, Anthony.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 06 Feb 2023: A.7.

 

Chinese Supplies Fuel Moscow's Ukraine Military Effort

"WASHINGTON -- China is providing technology that Moscow's military needs despite an international cordon of sanctions and export controls, according to a Wall Street Journal review of Russian customs data.

The customs records show Chinese state-owned defense companies shipping navigation equipment, jamming technology and jet-fighter parts to sanctioned Russian government-owned defense companies.

Those are but a handful of tens of thousands of shipments of dual-use goods -- products that have both commercial and military applications -- that Russia imported following sanctions last year, according to the customs records provided to the Journal by C4ADS, a Washington-based nonprofit that specializes in identifying national-security threats. Most of the dual-use shipments were from China, the records show.

Russia's foreign, defense and economic ministries didn't respond to requests for comment. "Russia has enough technological potential to ensure its security and conduct the special military operation. This potential is constantly being improved," Kremlin spokesman Dmitry Peskov said.

While Russia has the capability to produce much of its basic military needs domestically, it relies heavily on imports for dual-use technology, such as semiconductors, that is essential for modern military.

Western officials said their economic-pressure campaign launched last February would cripple Moscow by targeting those exports to Russia, including computer chips, infrared cameras and radar equipment.

But customs and corporate records show Russia is still able to import that technology through countries that haven't joined the U.S.-led efforts to cut off Moscow from global markets. Many of the export-controlled products are still flowing through nations such as Turkey and the United Arab Emirates, whose governments Western officials accuse of flouting the sanctions and controls. Turkish officials have said the sanctions are ineffective and that Ankara is playing an important role as an interlocutor with Russia. Under pressure from the U.S., Turkey has moved to halt some financial and business ties.

The U.A.E. Embassy in Washington didn't comment.

The records reviewed by the Journal, however, show Chinese companies -- both state-owned and private -- as the dominant exporters of dual-use goods that U.S. officials say are of particular concern.

The Journal analyzed more than 84,000 shipments recorded by Russia's customs office in the period after the West launched the economic pressure campaign that focused on commodities the Biden administration red-flagged as critical to the Russian military.

The official Russian customs records, which C4ADS said might not include all records, detail each shipment into the country, providing dates, shippers, recipients, purchasers, addresses and product descriptions.

The Journal also identified from the records more than a dozen Russian and Chinese companies targeted by the U.S. under the Russia pressure campaign, as well as all other sanctions programs.

Industry and government officials said the data offer substantial evidence of how Russia is able to sidestep the centerpiece of the West's response to Russia.

"Despite international scrutiny and sanctions protocols, reliable global trade data shows that Chinese state-owned defense companies continue to send military-applicable parts to sanctioned Russian defense companies," said Naomi Garcia, an analyst at C4ADS.

"The allegation that China provides 'aid' to Russia has no factual basis, but is purely speculative and deliberately hyped up," Liu Pengyu, China's spokesman at its Washington embassy told the Journal.” [1]

1.  World News: Chinese Supplies Fuel Moscow's Ukraine Military Effort
Talley, Ian; DeBarros, Anthony.  Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 06 Feb 2023: A.7.