Russia’s Rosneft fails to award big oil tender with buyers wary

Russia’s biggest state oil producer Rosneft PJSC failed to award a tender to sell millions of barrels of its flagship Urals crude as European buyers continued to stay away following the invasion of Ukraine, five traders with knowledge of the tender said.

Rosneft was seeking to sell as much as 5.1 million tons, or 37 million barrels of Urals for loading from three western ports in May and June, but no bids were placed from European companies, the traders said. Some Asian refiners submitted bids, but Rosneft deemed them too low, the traders said. Some Asian refiners complained that some requirements in Rosneft tender were too stringent, such as 100% pre-payment.

The failure highlights an increasing difficulty for Russian producers in finding replacement buyers after European refiners scaled back their purchases. Although more than half of Urals seaborne exports are still destined to Europe, the ratio has dropped sharply from pre-war levels of as much as 90%.

There are still some willing buyers. India has significantly boosted its imports of Urals, replacing Europe as the top destination of the grade. But buying interest remains muted elsewhere and it remains to be seen whether Asia can absorb the extra barrels shunned by Europe.

Russia is planning a high level of Urals exports next month. The latest loading program showed about 8.71 million tons or 2.06 million barrels a day of the grade will be shipped in May. The daily volume is slightly lower than April’s three-year high of 2.26 million, but much higher than an average of 1.5 million in 2021.

Reuters reported the failed sale process earlier, and said Rosneft also didn’t award a tender for some Asian grades.

Rosneft didn’t immediately respond to a request for comment.