Opinion: ESAI sees FSU oil exports higher this winter

-- ESAI, Energy Security Analysis, Inc, is a Massachusetts-based energy consultancy. The opinions expressed are those of ESAI.--

Nov 3 - Exports from Russia, Kazakhstan and Azerbaijan to countries outside of the CIS will rise by about 300,000 b/d this winter from third quarter levels, according to ESAI's CISWatch, released late last week.

Almost half of this increase will result from the startup of the new ESPO pipeline in Eastern Russia. All signs indicate work toward the launch of the ESPO pipeline is on track and exports to Kozmino Bay will commence in December.

According to Transneft's loading schedule, Surgutneftegaz and TNK-BP will export from Kozmino Bay in the fourth quarter. Their export volumes will be concentrated in December.

While overland exports via the branch to China will not begin until 2011, deliveries of Russian crude to China by rail and via Kazakhstan (Atasu-Alashankou pipeline) have trended upward in recent months.

(For a graphic, click here )

This is the start of a long-term shift in FSU crude exports toward Asia. Higher refinery throughput in Russia after October, and the launch of the ESPO pipeline, will undermine Urals exports to Europe in the fourth quarter and early 2010.

Meanwhile light sweet crude exports from the Black Sea and Med have rebounded to over 1.7 million b/d after dipping to 1.62 million b/d in August. While outflows should exceed 1.7 million b/d in the fourth quarter, flows out of the Black Sea region will be undermined by imports to Ukraine.

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