Russian Sokol crude tender fails to attract bidders, doubts over ESPO

11 Mar 2022

Quantum Commodity Intelligence - Sokol crude oil equity-producer ONGC has failed to attract even a single bid for a tender for the light sweet grade as buyers continued to shun Russian oil, fearful of further sanctions and the backlash that comes with the purchase of spot Russian crude.

Sources said that the cargo would usually attract around a dozen bids from trading houses and international majors, but the latest tender went unawarded as buyers stayed away.

Earlier this month, Shell was forced to issue an apology and scale back Russian operations after buying a heavily discounted Urals cargo in the Platts trading window. 

Traders say that India's ONGC will likely now try and place the 700,000/b May 2-8 cargo via a private sale, likely to China, or ship the cargo back to India for processing there.

The distillate-rich grade would otherwise have attracted a record premium of at least Dubai swaps +$15/b, having traded last month at around Dubai swaps +$8/b.

Potential buyers also have to factor in the lack of credit facilities available for Russian crude, while a growing number of shipping fleets are avoiding lifting Russian barrels.  

The failure to find a buyer for the cargo now casts a shadow over Russian ESPO crude for May, which is typically sold in three tranches by the state-owned Surgutneftegaz.

If buyers cannot be found, sources say that production may have to be scaled back due to limited storage at Kozmino, the Pacific oil terminal where ESPO is loaded.

By contrast, Qatar's Al Shaheen tender was awarded at a record premium to Dubai swaps of $12/b this week.