(Reuters) -Russia’s Rosneft failed to sell oil in a jumbo tender after demanding prepayment in roubles, five traders said on Monday, meaning the country’s top oil company will need to find ways to divert more crude to buyers in Asia via private deals. The failure of the tender highlights a growing struggle by the Kremlin […]
(Reuters) -Russia’s Rosneft failed to sell oil in a jumbo tender after demanding prepayment in roubles, five traders said on Monday, meaning the country’s top oil company will need to find ways to divert more crude to buyers in Asia via private deals.
The failure of the tender highlights a growing struggle by the Kremlin oil major to sell oil due to sweeping Western sanctions on Russia for the invasion of Ukraine.
Moscow, which calls the invasion “a special operation”, has publicly acknowledged it has faced some oil export problems since March due to sanctions but pledged to boost cooperation with Asia to divert some oil sales from the West.
Western sanctions on Russian oil are part of a broader effort to isolate Moscow politically and economically for the invasion that includes discussion of an EU-wide oil embargo.
The European Union also advised its members not to succumb to Russian President Vladimir Putin’s demand to pay roubles for gas from Russian gas monopoly Gazprom.
The EU is much more dependent of Russian gas than on oil and analysts and economists have said a full embargo on Russian gas would plunge the continent deep into recession.
Last week, Rosneft followed on the footsteps of Putin’s orders to Gazprom and asked for 100% prepayment and conversion of the payment into roubles for purchases of its oil.
Rosneft tendered to sell 6.5 million tonnes of Urals, Siberian Light, Sokol and ESPO Blend oil loading from Russian ports in May-June but no bids were submitted by Monday, the five traders said.
Rosneft did not immediately respond to requests for comment.
It was extremely hard to meet the tender terms, the traders said adding the sale would have been difficult enough without the updated terms as most European majors and even trading firms are winding down purchases from Rosneft.
India’s state refiners did not submit bids while volumes of Far East oil grades, Sokol and ESPO Blend, were too prompt to gather interest.
“Specific terms and a thin timeframe require individual negotiations,” a source with an Asian trading firm said, adding that some of the volumes offered could be sold in private deals.
China has not publicly condemned Moscow’s actions in Ukraine and India has bought more than twice as much crude from Russia since the invasion despite pressure from Washington to cut sales.
Another source familiar with Rosneft’s tender said that the main goal of the tender was to “announce a rouble payment requirement to the market”, which had been achieved.
(Reporting by ReutersEditing by David Goodman and Susan Fenton)
