Press Release: 06.03.09

Russian Crude Exports to Sweeten

BSOTON, MA - In ESAI’s CIS Watch, an outlook on the former Soviet states, ESAI examines the petroleum market dynamics of Russia and other former Soviet states.

Russia has historically exported medium sour crude, but over the next decade there will be more than a two million b/d increase in light sweet exports. Russia officially commences work on phase two of the Baltic Pipeline System this month and will soon complete phase one of the East Siberia-Pacific Ocean pipeline. Changes to Russian export infrastructure reflect both Russia’s new crude oil export strategy and the changing landscape of Russian output. Russia, traditionally a supplier of medium sour crude, will be transformed into a significant supplier of light sweet crude to European and Asian markets over the next decade as a result of these changes.

Russian exports of light sweet crude to Europe will grow by more than one million b/d over the next decade. In the Black Sea, growth will result from development of the Russian Caspian and the increase of transit flows from Kazakhstan. In northwestern Russia, the development of Timan-Pechora will support growth of light sweet exports from the Barents Sea. These developments will partially offset declining North Sea supply of light sweet.

Growth of supply via the ESPO pipeline will raise Russian light sweet exports to Asia to 1.3 million b/d by 2020 based on ESAI’s forecast for supply growth and exports. "Russian light sweet will be an attractive substitute for China’s declining output of medium sweet," notes Oil Market Analyst Andrew Reed.

For more information, or for a copy of the report, please contact Andrew Reed at or 781-245-2036.

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