European Union countries banned all seaborne oil imports from the Russian Federation from Dec. 5 last year, but many countries had already scaled back purchases before then.
Finland imported its last cargo of Urals oil in July 2022, according to the annual report of the state’s only refiner Neste Oil, ending its purchases of Russian oil, including under long-term contracts.
Russian oil imports, at 1.5 million tonnes, accounted for just 17% of Finland’s total crude imports in 2022, down from 84% a year earlier. Shipments from Norway more than quadrupled to 5.65 million tonnes, or 65% of the total.
GRAPHIC – Finland’s oil imports 2022
“Neste does not disclose detailed information regarding our past or future crude and feedstock suppliers,” the company’s media representative told Reuters citing executive vice president oil products Markku Korvenranta.
Finland had relied almost exclusively on Urals as a refinery feedstock as the proximity of the Russian ports of Primorsk and Ust-Luga made for shorter and cheaper tanker trips.
GRAPHIC – Finland’s oil imports in 2021
The closest alternative to Urals in the region is Norway’s Johan Sverdrup grade, of which Finland imported some 3.5 million tonnes, or about 10% of output, last year, according to Refinitiv Eikon data.
Finland also took Norwegian grades Oseberg, Troll and Gudrun, and Forties and others from the UK. It imported 0.6 million tonnes of U.S. WTI.
The cost of Oseberg and Troll averaged about $103 per barrel in the year to March 2023, according to Refinitiv data, while the average price of Urals over the same period was $69 per barrel.
Johan Sverdrup normally trades a few dollars a barrel below Oseberg and Troll, traders said.
Transporting North Sea oil grades to Finland costs about $2-3 per barrel compared with Urals freight costs of below $0.50 per barrel from Russia’s Baltic ports to Finland’s Porvoo.
Although the shift in purchases added to Neste’s refining costs, margins were generally good last year as EU states reduced purchases of Russian oil products and global prices rose, traders said.
Oil products’ full-year total refining margin averaged $23.4 per barrel in 2022 compared to $9.0 per barrel in 2021, Neste’s representative said, citing the company’s financial statement for the last year.
(Reporting by Reuters; Editing by Kirsten Donovan)