MOSCOW, May 31. /TASS/. Russian oil companies could lose around $5-10 bln due to the EU decision to impose partial embargo on Russian oil supplies, Head of the Energy Development Center Kirill Melnikov told TASS.
Earlier, Bloomberg estimated that Russia could lose about $22 bln in oil revenues due to a partial embargo on Russian oil supplies to Europe. According to the agency’s estimations, Russia’s losses from the embargo on sea oil supplies to European countries could amount to $10 bln. Russia could lose $12 bln from the suspension of supplies via the northern branch of the Druzhba pipeline to Poland and Germany. At the same time, Russia will continue to receive an income of around $6 bln by maintaining supplies through the southern branch of the Druzhba pipeline to Hungary, the Czech Republic, and Slovakia. Bloomberg's calculations are based the information about Russia’s deliveries to European countries for 2021 and the average price of the Russian export grade Urals oil of $85 per barrel.
According to Melnikov, Bloomberg's estimates are based on the assumption that volumes of Russian oil supplies via sea routes have been redirected from Europe to Asia and sold at a current discount of Urals oil to Brent of around $34 per barrel. The agency, the expert added, also assumed that the volumes of oil supplied through the northern branch of Druzhba pipeline would not be sold. "We believe the estimate is incorrect, as it does not take into account the growth in prices for Brent oil, which, in our opinion, is inevitable," he said.
According to the expert’s calculations, if the price of Brent oil rises by $15 per barrel compared to the scenario without oil embargo and the discount on Urals remains at the same level, Russian companies would lose around $3 bln on redirecting sea oil shipments from Europe to Asia. "We also expect that at least half of exports via the northern branch of Druzhba pipeline will still be redirected to Asia, oil will be shipped through the ports of the Baltic. In this case, losses could reach around $7 bln - $6 bln due to declining volumes and around $1 bln due to discount. This way, the total losses could amount to around $10 bln," he believes.
At the same time, Melnikov stressed that these are estimates, and the real situation may be more positive. "For example, if all the volumes from Druzhba could be redirected to Asia, the losses will immediately drop to $5 bln. If oil prices rise more than we expect, there may be no losses at all," the expert said.
During the first day of the EU summit on May 30, the countries’ leaders reached an agreement on the sixth round of sanctions against Russia. After a month of discussions, they were able to agree on a delayed embargo on oil purchases from Russia, which would include tanker shipments, with the ban coming into effect six months after the sanctions are put into effect. For now, oil supplies from Russia through the Druzhba pipeline will continue to Hungary, Slovakia, and the Czech Republic, while Germany and Poland promised to stop oil imports via the pipeline by the end of the year.