Norway Trying to Close the Oil Gap Left by Russia in Europe
As Europe searches the world for oil to replace Russian barrels, help comes from an unexpected place.
Norwegian Equinor is shipping crude from the giant Johan Sverdrup field in the North Sea to the European market, rather than Asia, from which it exported around 100 million barrels last year.
At the same time, demand is finding demand for crude oil withdrawn from Asia, as Russia, China and India increase their purchases, which have been affected by large discounts.
In Europe, Norwegian crude oil of similar Ural quality to Russia has become a substitute for refineries in Germany, Poland, Lithuania, Sweden and Finland, as well as in Turkey, according to Equinor.
“European traders and refiners are now requesting Johan Sverdrup notes and using them to replace some of the notes they previously received from Russia,” CEO Anders Opedal told Reuters.
“So far this year we’ve seen most of the cargo going to Europe,” said Opedal. “While all cargoes went to Europe in March, 60% of them went to Asia in March last year.”
Cheaper shipping costs due to shorter European deliveries give Equinor extra profits in addition to the already record high revenue generated by sales to energy-starved Europe, including natural gas.
Western countries are trying to reduce their dependence on Russian oil and gas, due to what Russia calls a “special military operation” after Moscow’s invasion of Ukraine in February.
Refinitiv Eikon data showed that in 2021, around 100 million barrels of Sverdrup crude went to Asia, with an additional 274,000 barrels per day going to China, with 64.9 million barrels per day.
However, since the beginning of Russia’s invasion of Ukraine, Sverdrup’s flows to China have dried up, while those to Europe have more than doubled.
EU plans call for an embargo that would affect 90% of Russia’s oil imports by the end of the year.