Moscow: Russia is resorting to a number of murky practices to sell a lesser-known oil product to buyers wary of breaching sanctions, and to beat a financial cap set by the European Union and its allies.
Sellers of Russian naphtha — which is primarily used to make plastics and petrochemicals — are facing more hurdles getting the product to market since sanctions took effect in early February. That’s led to measures such as the fuel being labeled as gasoline or cargoes leaving ports without a destination, according to people familiar with the matter, and FGE and Kpler.
“There isn’t a clear, dedicated outlet for Russian naphtha now that its major buyers South Korea and Europe can’t take it directly,” said Armaan Ashraf, the global head of natural gas liquids at industry consultant FGE in Singapore. “Placing Russian naphtha may be more difficult than its crude.”
The lack of buyers that can soak up large volumes of naphtha has exacerbated the problem for Russia. China and India are taking more but both have ample domestic supplies, while South Korea — a key consumer pre-war — has shunned direct imports following sanctions. Brazil has been rare bright spot, however.
Russia shipped around 1.34 million tons of naphtha in March, a similar volume to the same period last year, according to data from Kpler, but questions remain whether the nation can maintain such flows over coming months.