SINGAPORE, July 25 (Reuters) - China's Sinopec Corp
has cut its purchases of Russia's ESPO crude oil in
July as other buyers, including from India, were willing to pay
higher prices, trade sources said.
A pull-back in Russian oil purchases by Sinopec, Asia's
biggest refiner, suggests that its earlier buying was driven by
economics rather than political considerations.
Chinese and Indian oil companies have increased their
Russian oil imports in May and June despite Western sanctions on
Russia as a result of the Ukraine conflict that have upended the
global oil trade.
China has refrained from condemning Russia's invasion of
Ukraine that started on Feb. 24, which Moscow calls a "special
military operation", and in a meeting on Feb. 4 the leaders of
the two countries said their friendship had "no limits".
Sinopec, through its trading arm Unipec, is expected to lift
fewer cargoes in July after submitting lower bids to Russian
exporters who then sold the cargos to trading companies and
other Chinese clients that bid higher, said four sources who
participate in the market and declined to be identified.
Sinopec had been the biggest buyer of ESPO, which loads from
the port of Kozmino in Russia's Far East, in the past two
months, snapping up an estimated 20 million barrels, according
to traders and data from tanker tracker Vortexa Analytics.
Sinopec bid at discounts of about $20 a barrel below the
price of Middle East benchmark Dubai on a free-on-board basis
for July shipments, similar to what it paying for cargoes in May
and June, while deals were done at $8 to $13 discounts, the
"Sinopec may only lift a very small amount as their bids
were too low for the Russians," said one of the four sources, a
China-based trading executive.
A Sinopec spokesman declined to comment on the company's
The companies that beat out Sinopec for the ESPO cargoes in
July include Dubai-based trader Coral Energy, state-owned
companies CNOOC, PetroChina, and Shandong Port International
Trade, which is backed by the local provincial government,
according to three trading sources and data from Vortexa.
Russia is expected to raise its ESPO exports from Kozmino to
a record of 880,000 barrels per day (bpd) in July, Reuters
reported on June 7, from an average of 750,000 bpd in 2022.
Swiss-based trader Paramount Energy, which specializes in
marketing the output of small, independent Russian producers, is
expected to lift around 7 million barrels of ESPO in July, one
of the largest lifters, said two sources with knowledge of
A regular marketer of ESPO crude to Chinese independent
refiners since 2016, Paramount has expanded its China marketing
in recent months by working with Chinese state-run trader
Paramount Energy declined to comment on its July volumes but
it said it has delivered Russian cargoes to customers under
long-term commercial contracts established before Feb. 24, when
Russia invaded Ukraine.
"The company is working to reduce its trading of Russian
crude as these long-term contracts expire, a process that is
ongoing," said a company spokesperson.
Top Russian exporter Rosneft is also likely sending more
ESPO shipments to India under its recent supply agreement with
state-run Indian Oil Corp.
Before the war, China's independent refiners purchased
nearly all of the ESPO cargoes available and the crude rarely
flowed to India because the longer voyage reduced the
profitability of purchasing it.
So far in July four shipments totalling close to 3 million
barrels were destined for India, up from three in June,
according to traders and Vortexa data.
(Reporting by Chen Aizhu; Editing by Florence Tan and Christian