Bulgarian diesel and gasoil buying interest has increased as Russian product supply tightness intensifies in the Black Sea region.
Bulgaria's diesel imports slumped to 10,900 t/d during 1-19 September, down by 42pc on the month, according to Vortexa data, as diesel and gasoil flows into the country from its top suppliers Russia and Turkey retreat.
Total Russian diesel loadings have dropped by 15pc on the month to 120,400 t/d so far in September, as the Russian government pressures refiners to rein in exports because of tight domestic diesel supply and regional shortages, which have driven wholesale prices up sharply.
Russian diesel deliveries to Bulgaria have slumped in turn to the equivalent of 4,200 t/d in September, down by around half the 8,200 t/d delivery rate seen in March-August after Russian product exports were blocked from the rest of the EU in February.
Bulgaria currently retains an exception in the EU to continue the import of Russian-origin crude and products.
But in a sign of Turkey's reliance on Russian diesel supply, Turkish deliveries to Bulgaria have also fallen — to just 26,100t to date in September, down by two-thirds on the month. The arrival of Russian product in Turkey — primarily for state-owned refiner Tupras — had allowed Turkish refiners to sell cheaper Russian diesel on the domestic market, while exporting their own low-sulphur output to Europe.
But Turkish export capacity appears to be constrained as Russian arrivals fall.
Turkish refineries are not offering Handy sized cargoes to export this month, according to one trader in the region, but instead offering smaller 6,000t cargoes. Turkish refineries are limiting export volumes as they redirect their diesel and gasoil output to cover the domestic market because of lower Russian arrivals, the source added.
Bulgarian buying interest has risen as a result, according to the source. In a sign of prompt supply concerns, buying interest has been strongest for Azeri diesel loadings, given the short cross-Black Sea shipping route from Georgian ports. But Azeri diesel and gasoil output is mostly being sold to domestic and Georgian consumers. Total Azeri ultra-low sulphur diesel loadings stood at around 50,000-60,000t at Georgian ports in the past four months, the source added, as Azerbaijan seeks to sell smaller, bespoke volumes at higher premiums to regional buyers.
Bulgarian buyers are instead facing the prospect of buying Indian-origin cargoes which may mean a much longer journey time, the source said.
For now, the Netherlands appears to be the supplier of last resort. Dutch arrivals reached 102,300t during 1-19 September, making the Netherlands the top supplier to date this month, after two deliveries totalling 215,000t last month following a five-month hiatus in deliveries.
Looking forward, European or east of Suez suppliers may have to step up to supply Bulgaria as Russian diesel exports to Bulgaria could fall further, with Russia considering a "protective" export duty of $250/t on refined products as domestic shortages and price rises accelerate.
