This weekend in the port of Odessa among other vessels is the tanker Wisdom Venture, which made the first in the history of direct delivery of American oil to Ukraine. However, experts believe that Kiev views the supply of hydrocarbons from the United States not as a real way to fill the fuel shortage on the Ukrainian fuel market, but as an opportunity to recall its allied relations with Washington.
Recall that on Saturday, July 6, the press service of the port of Odessa reported the arrival of a 237-meter tanker flying the flag of Hong Kong, which delivered a shipment of Bakken oil. Unloading this vessel should take about 36 hours.
“The tanker Wisdom Venture was delivered to the berth No. 2N of the oil port of Odessa, which delivered 75 thousand tons of oil from the USA,” the report says.
As specified in the press service, after transferring the fuel to the ground reservoirs, the raw materials will go to the Kremenchug Oil Refinery (Refinery) via the Odessa-Kremenchug pipeline. The company PJSC Ukrtatnafta acted as the customer.
- View of the port from Odessa Marine Station
- RIA News
- © Sergey Polyakov
It is noted that the next supply of American oil may take place in August 2019. At the same time, the head of the Odessa port administration, Igor Tkachuk, said that earlier, large volumes of oil from Russia, Kazakhstan and even Venezuela used to transit through the sea harbor for the Mozyr Oil Refinery in Belarus.
“Now tankers with raw materials come from Azerbaijan from time to time. New cargo traffic from the USA will also be provided with high-quality handling services. The port oil terminal is a large universal terminal with a capacity of up to 25 million tons per year and is equipped with equipment to work with almost all types of oil tankers, ”said Tkachuk.
“There is not enough capacity”
It should be noted that Kiev turned to the supply of American oil against the background of the cessation of imports of Russian raw materials. In April of this year, Russian Prime Minister Dmitry Medvedev announced the cessation of supplies to Ukraine of coal, oil and petroleum products. The embargo came into effect on June 1.
The decision to stop the supply of hydrocarbons to the Ukrainian market was made by Moscow in response to the new sanctions imposed by Kiev.
The Russian side notes that counter sanctions can be lifted if Kiev cancels the restrictions, in response to which they were adopted, - restricting the supply of a number of industrial and food items.
But instead, the Ukrainian authorities chose to look for alternative sources of hydrocarbon supplies - the purchase of a batch of American oil was one of Kiev’s steps in this direction, experts say. At the same time, the parties preferred to not disclose the value of the contract.
- Prime Minister Dmitry Medvedev
- RIA News
- © Dmitry Astakhov
According to experts, the supply of 75 thousand tons of American oil practically does not affect the Ukrainian energy market. For example, in 2018, Ukraine purchased about 8 million tons of oil and oil products from foreign suppliers. 38.15% of supplies accounted for Belarus, 37.35% - for Russia, and the remaining 24.5% - for other suppliers, including from Europe.
It should be noted that the Belarusian supply of fuel to Ukraine, although not completely stopped, has significantly decreased lately. For many years, Minsk earned on re-export of Russian oil products to the Ukrainian market, acquiring raw materials from Moscow at preferential rates. However, in October last year, Moscow decided to stop supplying fuel oil, gasoline and diesel fuel to Belarus in excess of the needs of the Belarusian market.
Against this background, the share of Russian deliveries of petroleum products to the Ukrainian market increased - according to the consulting company UPECO, in the period from January to March of this year, the share of Russian petroleum products in the structure of Ukrainian imports is already 45%.
Therefore, the introduction of an embargo by Moscow on the export of petroleum products to Ukraine has created serious difficulties for Kiev, experts say. However, the difficult situation in the Ukrainian fuel market developed even before the introduction of counter-sanctions.
According to the Ukrainian consulting agency Nefterynok, the country ranks 59th (61 in total) in the ranking of countries in the availability of gasoline, ahead of only India and Pakistan. On average, the cost of one liter of petrol costs the resident of Ukraine 15.8% of its daily income. Last year alone, the price of gasoline at Ukrainian gas stations rose by about 20%, according to estimates from the consulting company UPECO. Against the background of the decline in real incomes of the population, for many people the purchase of gasoline simply became unaffordable, which is also indicated by the increased popularity of cheaper autogas among motorists.
As one of the possible solutions to the accumulated energy problems in Ukraine, they consider increasing their own production of gasoline and other petroleum products from purchased oil - at the same Kremenchug refinery. However, many experts doubt the realism of such intentions. As RT Leading Researcher of the Institute for World Economy and International Relations of the Russian Academy of Sciences Mikhail Krivoguz explained, there are a number of limiting factors to increase tanker oil supplies to Ukraine.
“First of all, the port of Odessa cannot cope with such volumes of oil, which Kiev expects to replace. In addition, the country does not have sufficient capacity for processing, as today in Ukraine, by and large, there is only one refinery of the six enterprises that were once built. But even if these obstacles were overcome, it would be much more convenient and more profitable to get oil for refining from neighboring Russia, but not from the United States, ”the expert noted.
Recall that for 40 years in the United States there was a ban on the export of crude oil abroad. Own oil fields were considered as an emergency reserve in case of interruptions in import supplies, and the United States purchased most of its energy resources abroad. However, the development of shale technology prompted Washington to revise this concept, and in 2015 the ban on oil exports was lifted. In recent years, oil grade Bakken, the batch of which arrived in the port of Odessa, is produced by hydraulic fracturing.
"Buy the finished product"
The reasons for which the Ukrainian side has begun to purchase American oil should be sought more on the political rather than the economic plane, experts say.
“In fact, such oil supplies from the United States will not improve the situation on the Ukrainian energy market - volumes are too small,” said Mikhail Krivoguz. - This is a purely political gesture of Kiev, as is the case with gas. The Ukrainian leadership is trying to demonstrate that Ukraine is supposedly completely energy independent. ”
As Alexander Pasechnik, head of the analytical department of the National Energy Security Fund, recalled in a conversation with RT, recently the Ukrainian authorities often agree to overpay for raw materials, guided by political motives.
- Ukrnafta gas station in Kiev
- RIA News
“The terms of this transaction are not disclosed, therefore it is difficult to talk substantively about how expedient American oil supplies are for Ukraine. But if we proceed from the objective conditions of logistics and world prices, then we can assume that for Kiev this contract may have more political significance than practical, ”explained Pasechnik.
Stanislav Mitrahovich, a leading expert of the National Energy Security Foundation, a lecturer at the Financial University under the Government of Russia, adheres to this point of view.
The interviewee RT explained that today for Ukraine, increasing the import of crude oil simply does not make sense: over the past decades, the refining capacity created in Soviet times has declined.
“Kiev has long gone the way, when other countries that make oil products produce added value, and the Ukrainians themselves simply buy the finished product, and this is a deep problem for Ukraine,” the expert explained.
Three of the six refineries built during the Soviet period in Ukraine — Nadvoryansky, Drohobychsky, and Kherson — were closed in 2005–2007 due to low efficiency. The Lisichansk refinery, once the former one of the largest refining centers in the country, also fell into disrepair and was closed in 2012. Another enterprise, the Odessa Refinery, ceased operations in early 2014. As a result, only the Kremenchug plant remained from operating refineries in Ukraine.
According to Mitrakhovich, Ukraine would have enough oil supplies from Azerbaijan and its own production to load the existing refining capacity - there is no need to transport raw materials from overseas.
“Therefore, American deliveries are, by and large, only an informational occasion to once again show what kind of“ close partners ”Kiev and Washington are, and Ukraine allegedly represents an important sales market for American oil workers,” concluded Stanislav Mitrahovich.
In turn, the Odessa political scientist Valery Pesetsky also expressed the opinion that from an economic point of view, the supply of American oil does not make any sense. First of all, due to the fact that the capacity of the Kremenchug refinery, originally designed to process almost 19 million tons of oil, is not actually used: in 2018, the volume of pumping through it was about 700 thousand tons. Moreover, the deliveries were, in fact, necessary in order not to completely stop the plant.
“One more thing: technologically, the Kremenchug refinery is designed for Russian Urals oil, and the American lightweight was brought here. How the plant will process it remains a mystery, ”said Pesetsky.
The expert also did not rule out that the purchase of American oil was carried out in preparation for the meeting of the presidents of the United States and Ukraine, Donald Trump and Vladimir Zelensky.