By Jack Wittels (Bloomberg) —
Russia has set up a site in the Baltic Sea to allow it to transfer refined fuels from one vessel onto another in a bid to help it overcome a stretched tanker market before the onset of European Union sanctions.
The site, near the port of Ust-Luga, will allow ship-to-ship transfers of fuels, including diesel, according to a statement at the website of Rosmorport, the nation’s agency regulating and providing maritime services in the country’s seaports. Its establishment was ordered by Russia’s Transport Ministry in September.
The International Energy Agency said in its Oil Market Report on Wednesday that the strategy will allow smaller tankers to discharge onto bigger ones that can then carry the fuels further afield.
Historically, most of Russia’s diesel from the port of Primorsk — the country’s main Baltic exporting facility — has gone to Europe in cargo sizes of about 30,000 tons. But with the EU banning seaborne imports from early February, bigger tankers, more suited to long-distance trading, will likely be required.
The ship-to-ship, or STS, site will allow for those cargo accumulations.
It’s not clear how much the approach will also help Russia to deal with a possible shortage of tankers that are built for icy conditions.
Ust-Luga usually declares ice conditions later than Primorsk, according to Richard Matthews, head of research at E.A. Gibson Shipbrokers Ltd.
This means that, for a while, ice-class tankers will potentially be able shuttle fuel from the most difficult ports to nearby Ust-Luga for an STS transfer, rather than carrying it all the way to its final destination.
Still, Ust-Luga can experience ice in winter.
And with more Russian cargoes being shipped over longer distances — for both crude and refined fuels — the pressure on ice-suitable ships will mount unless a solution is found.
© 2022 Bloomberg L.P.
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