CEFC Set to Overtake Trafigura as Main Rosneft Oil Trader in Asia
China's CEFC looks set to unseat Trafigura as Rosneft's main oil trading partner in Asia after securing a five-year deal to take 60 million tonnes of crude from Russia's energy giant, industry sources said.
International trading firm Trafigura is now Rosneft's main buyer of seaborne volumes of ESPO Blend and Sakhalin Sokol oil.
But the crude lifting deal with CEFC, which in September became Rosneft's second biggest shareholder by taking a more than 14 percent stake, suggests a shift by the Russian oil firm which has rotated its main lifters every few years.
For CEFC, the deal is the next step in its drive to create a globally integrated oil supply chain. The Chinese firm has already built a trading team in Beijing and hired traders for its new Singapore office, market sources said.
In January, CEFC receives its first 200,000 tonnes of ESPO from Kozmino port and 200,000 tonnes of Sokol crude via DeKastri terminal, alongside some Urals oil from Novorosiisk, three traders told Reuters. From April, CEFC plans to take seven to nine cargoes a month of ESPO from Rosneft, the same amount Trafigura now buys, the traders added.
"If CEFC starts to buy as much ESPO from Rosneft, there will be just nothing left for Trafigura," a ESPO trader said.
An industry source said Rosneft could not increase ESPO loadings at Russia's Kozmino due to the Pacific port's capacity limits. Kozmino can load 2.6 million to 2.8 million tonnes of ESPO Blend a month, with Rosneft accounting for about 1 million.
Rosneft is already committed to selling a minimum of one cargo of ESPO a month to China National Petroleum Corp in a state-to-state deal, while China's Chemchina will receive one or two cargoes a month under a term contract.
That leaves Rosneft with seven to nine cargoes a month to sell, which is the volume it has now agreed to send to CEFC.
Trafigura declined to respond when asked about the shift in trade, saying it did not comment on commercial matters. Rosneft and CEFC did not respond to Reuters request for comment.
Under its deal with Rosneft, CEFC plans to supply China's small, privately owned "teapot" refineries, which want ESPO due to lower transport costs compared with crude from other ports.
Rosneft has tended to shift between traders every few years. Gunvor once dominated Rosneft’s trade in Europe but then lost ground to Glencore (GLCNF) and Vitol, which both offered prefinance contracts. Trafigura then took over as Rosneft's biggest lifter of seaborne crude volumes in Europe and Asia.
Although Trafigura now looks set to lose its top position in Asia, a trading source said it was expected to increase its presence in supplying Rosneft's crude to Western destinations.
"If CEFC is likely to replace Trafigura in the East, I think Rosneft will think of some compensation for its old ally. There will be Urals to offer," he said.
Rosneft's five-year prefinance contracts with Glencore and Vitol expire in March, which could free up about 1 million tonnes of Urals a month for April-December 2018, traders said. Rosneft has yet to indicate how that volume will be divided.
Reporting by Aizhu Chen in Beijing, Olga Yagova in Moscow, Florence Tan in Singapore; Writing by Olga Yagova