China’s top oil refiners seek state aid to keep Russia flows

China’s largest oil companies are seeking help from Beijing to keep Russian imports flowing after new sanctions on Moscow that are set to kick in next month.
State-owned oil refiners are worried about their ability to work out the payment channels, logistics and insurance needed to keep buying from the OPEC+ producer after 5 December, said people with knowledge of the matter, who asked not to be identified as the information isn’t public.
Some solutions that have been floated include increasing the volume of Russian oil transported via pipelines, setting up a designated bank to handle payments and liaison with Moscow, and the use of more out-at-sea transfers to help with the challenges of direct shipments between seller and buyer, said the people.
Read about the logistical hurdles of handling Russian oil here.
With the European Union set to ban the financing, insuring and shipping of Russian crude in three weeks – unless terms for exemption are met – Asian importers are seeking workarounds that don’t involve banks, insurance clubs and shipowners from the bloc. The request for help from Chinese refiners reflects concern that unless they receive assistance, these companies could run into challenges keeping Russian crude flowing.
READ: How Will Insuring Russian Oil Work? ‘We Don’t Yet Properly Know’
It’s unclear if any of these options will be rolled out, they added. China’s Ministry of Commerce and Ministry of Foreign Affairs didn’t immediately respond to faxes seeking comment.
JPMorgan Chase & Co had warned in July of a worst-case scenario of oil hitting a “stratospheric” $380 a barrel if western penalties prompt Russia to inflict retaliatory output cuts. More recently, however, President Joe Biden stressed the importance of keeping Russian oil flowing to prevent a supply shock that would send prices soaring.
Janet Yellen said this week that Chinese and Indian imports of Russian oil were aligned with America’s goal. The US treasury secretary has been rallying support for an oil-price cap that would exempt Russian shipments from European sanctions, although details on the initiative remain scant.
Russia shipped 2.9 million barrels of crude daily in the seven days to 11 November, according to data compiled by Bloomberg. The volume of Russian crude heading to Asia hit 2.01 million barrels a day on a four-week rolling average basis, with China and India purchasing the bulk of supplies.
Workarounds
China – the world’s no 1 crude importing nation – is no stranger to working with sanctioned regimes such as Iran, ...