Russian base oil exports in 2022 were behind 2021 levels for every month of the year and are unlikely to recover this year, trading firm DYM Resources told the Argus Global Base Oils Conference today.
DYM Resources' managing director Denis Varaksin attributed the decline to challenging export conditions resulting from Moscow's invasion of Ukraine, and said European buyers took only around 60,000t of Russian product in the second half of 2022 compared with around 90,000t a year earlier.
Although Russia had attempted to shift export patterns to other destinations, these are plagued with difficulties, he said. Notable alternative markets include Turkey, which has doubled its imports of Russian products to more than 120,000t but that is probably unable to absorb more base oil products.
Nigeria is another of Russia's traditional export destination, but the west African country's base oil imports fell in 2022 by between 20,000-30,000t to 260,000-270,000t. A weakening currency may limit Nigeria's ability to import.
India is another potential alternative market with a large import appetite. But discounted Iranian-origin products could be competitive with Russian base oils, which are affected by limited freight capacity and high insurance rates.
Sending Russian product to South America face the same issues, and these shipments more than halved in 2022 to 20,000t. With buyers in north America shunning Russian products, exports will probably continue to decline in 2023.
This could cause Europe to lose its buffer of base oil supply, although new suppliers have entered the Group I market that traditionally made up the majority of imports from Russia.
