China's private refiners have been "discreetly" buying Russian oil at high discounts to avoid scrutiny and US sanctions in response to open purchases, the Financial Times reported on Tuesday.
The development comes as Western countries pause their own purchases and even consider future embargoes as a result of the Ukraine situation. According to the report, an executive at a Shandong-based independent refinery said it had not publicly acknowledged dealings with Russian oil suppliers since Moscow's special military operation in Ukraine began on February 24.
The undisclosed official reportedly went on to say that the refinery has taken over part of the Russian crude purchase quotas from state-owned commodity trading firms, who are considered the face of Beijing and have mainly refused to sign new supply contracts.
"The purchases from China’s independent refineries reveal how some importers are bypassing traditional routes to access cheap Russian oil, helping Beijing maintain a low profile as the West barrages Moscow with sanctions," the publication noted.
The Shandong refinery is being cautious when purchasing Russian goods, according to a company executive, because the imposition of US secondary sanctions on third-country organizations doing business with Russia could result in the closure of the company's Singaporean trading arm.
The US and the UK have already banned Russian oil, while the EU is considering imposing an embargo and imposing limitations. Commodity traders in the EU and Switzerland will be unable to sell Rosneft barrels anyplace else on the globe starting May 15, according to reports.
Meanwhile, lockdowns in China, logistical and financial hurdles posed by anti-Russian sanctions, and the risk of the US imposing secondary sanctions have dampened state-owned Chinese refineries' willingness for any significant rise in Russian oil purchases, according to the report. However, shipping activity suggests a slight increase in Chinese purchases.
At least six supertankers, each capable of transporting up to 2 million barrels of oil, have reportedly agreed to combine cargoes of Russian Urals crude in Europe for shipment to Asia, mostly China but also India. The outlet's sources suggested that some of the Urals barrels may have been made in Kazakhstan. Chinese refineries were compelled to acquire them because Urals were discounted by $35 per barrel compared to Brent oil.
Chinese refineries allegedly favor Russia's ESPO grade oil from eastern Siberia, which is delivered via pipeline and ships from Kozmino near Vladivostok. The number of Aframax medium-sized ships expected to carry oil from Kozmino has increased from six per week last year to seven since the current events in Ukraine started, according to the report.
Citing data obtained from Kpler, a commodity data analytics business, the outlet noted that China's purchases of Russian crude and oil products are around 86,000 barrels per day more this month than they were on average last year.
After the start of the special operation to demilitarize and "denazify" Ukraine, the EU has adopted five packages of sanctions against individuals, organizations, the financial sector and the energy sector of Russia.
On Monday, the head of EU diplomacy, Josep Borrell, said that the sixth package of European sanctions against Russia will include cutting off new banks from SWIFT, new sanctions "for disinformation" and restrictions on oil imports. As the Kremlin spokesman Dmitry Peskov said earlier, the Western sanctions are indeed very serious, but Russia was preparing for them in advance.
In his turn, Russian President Vladimir Putin said that the policy of containing and weakening Russia is a long-term strategy of the West, and sanctions have dealt a serious blow to the entire global economy. He added that current events draw a line under the global dominance of the West in both politics and economics.