Russia’s second largest oil producer Yukos oil will turn political promises into practice this week by loading the first two million barrel tanker of Urals crude for the United States, trade sources said.
Following a presidential summit that stressed energy relations two weeks ago, the unprecedented shipment shows the strength of resolve on both sides of the Atlantic, particularly as most traders say that the current arbitrage economics simply do not add up.
The fact that a leading US oil company is said to be the buyer of cargo deepens its political significance, traders say. Neither company would comment on the deal.
Yukos, a pioneering oil company that has long championed profits over politics, first signalled the shipment last week by provisionally chartering the very large crude carrier Astro Lupus, expected to load offshore Greece around June 12th.
Market sources now say the vessel has been firmly fixed and will be loaded with three 80,000-ton Black Sea cargoes from Novorossiisk, Theodossia and Kavkaz, bringing the crude through the vessel-restricted Bosporus Strait.
This is believed to be the biggest ever Urals shipment, as restrictions at the Bosporus or in the Danish Straits prevent anything larger than a SuezMax, which is one million barrels, sailing directly from Baltic or Black Sea ports.
Shipping sources say a Russian producer may also be looking to book a separate VLCC from Murmansk in the far north of Russia on the Arctic Barents Sea, which avoids the straits. But traders said this looked dubious as it would take a long time to build up the necessary quantities as it is currently supplied by rail.
The country’s top producer LUKoil has mooted the idea of building a dedicated pipeline to the port.
On the surface, expanded energy ties between Washington and Moscow appear ideal, Russia's rapidly growing producers get access to the world's biggest energy consumer, while the United States gets to wean itself away from depending on OPEC oil.
The Organization of the Petroleum Exporting Countries has curbed production four times in the past year and a half, cuts that strike deep in America, where supply security has become a top issue in the past few years.
Although Russia joined in with a meager reduction this year, its exports, which are controlled by private companies, not by the state, offer more regularity than OPEC producers. But this free market supply may also hinder further trans Atlantic sales, traders say.
Despite a keen interest in promoting ties between Moscow and Washington, Russia's privately owned oil companies might have little appetite for sacrificing profits to politics. And they concede as much.
"Longer-term, we see more and more arbitrage opportunities for Urals crude out of the Mediterranean," said one Russian industry source.
Most industry sources view Yukos' VLCC shipment as a largely politically motivated test sale to gauge the economics of larger-scale shipments, which imply financial savings on freight, to the United States.
Russia has left the list of 33 largest holders of US government bonds, after the country disposed of at least a third of remaining bonds