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Russian oil companies reduce exports to the Czech Republic


According to Vedomosti, Russian oil companies significantly reduced exports to the Czech Republic in April. For the period 1-8 April, only 60,000t were exported (15% of the usual monthly traffic). The decline primarily relates to LUKOIL and Rosneft, which have not prolonged deliveries to Czech customers. The paper also speculates that exports through the Druzhba pipeline are less attractive than ordinary export alternatives, and with BTS-2 now having been launched, Rosneft and LUKOIL will prefer it to Druzhba. Gazprom Neft might partially offset the decline by increasing its exports to the Czech Republic in 2Q12. According to the Kommersant, alternative ways of supplying crude oil would be at USD 4-5/bbl more expensive. 

LUKOIL’s and Rosneft’s delivery volumes amount to around 3mmt per year. We doubt that the companies would be able to increase the price to the Czech Republic more than USD 4/bbl. Thus, the upside is limited to around USD 90mn per year, or USD 45mn for each company, which is not significant. We believe that the news is neutral for LUKOIL, Rosneft and Gazprom Neft. 

Dmitry Loukashov, Ekaterina Rodina, Alexander Kirevnin, Elena Kopylova, Mikhail Zarkhi
VTB Capital analyst

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