SOCAR and Vitol agree on the transit of Turkmen oil

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 SOCAR Trading and Vitol are close to concluding an agreement on the supply of approximately 1 million tons / year of Turkmen oil to Ceyhan.

Shipments of these volumes via the Baku-Tbilisi-Ceyhan (BTC) pipeline may begin in October and will cut the transit of Cheleken oil through Makhachkala by about half, an industry source told Argus Media.

Initially, the contract between the parties can be concluded for a period until the end of 2022.

It is assumed that SOCAR Trading, a trading division of the State Oil Company of Azerbaijan (SOCAR), will purchase consignments of Turkmen raw materials from Vitol for subsequent pumping via BTC. 

As a result, tanker shipments of Turkmen raw materials in the direction of Makhachkala may decrease to an average of 100 thousand tons/month from the current 170 thousand tons/month, according to market participants.

Since the beginning of 2019, Vitol has been exporting volumes of Turkmen oil to Makhachkala from the resources of Dubai’s Dragon Oil, Panamanian Mitro international and Eni Turkmenistan.

In 2018, most of these volumes were supplied to Azerbaijan to Socar Trading for pumping via BTC.

The transit of Turkmen raw materials through Makhachkala in 2020 increased to 2.34 million tons from 2.18 million tons a year earlier. 

However, in January-June, shipments in this direction decreased to 1 million tons from 1.11 million tons – a year earlier due to the redirection of Okarem oil volumes from the resources of Eni Turkmenistan to BTC at the beginning of the year.

The bulk of transit falls on the Cheleken grade from the Dragon Oil resources, whose supplies through Makhachkala increased over this period to 954 thousand tons from 865 thousand tons.

In Makhachkala, oil is supplied to the Dagnefteproduktbase for further pumping to Novorossiysk via the Transneftsystem.

Shippers take out from Novorossiysk consignments of Siberian light oil, which are formed in exchange for supplies of Turkmen sorts.

“The decision to redirect part of the volumes to BTC may be associated with a decrease in the efficiency of supplies of Siberian light oil, while the level of discounts for Turkmen raw materials decreased at the latest tenders,” the source said.

In the first half of the year, sea supplies of Turkmen oil and gas condensate to Azerbaijan increased to 644 thousand tons from 502 thousand tons in the same period a year earlier.

In addition to Okarem, SOCAR Trading buys in Turkmenistan a batch of Kiyanly mixture from the resources of Malaysian Petronas, as well as volumes of Cheleken and Okarem oil from Yug-Neftegaz.

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