Russia will drastically cut oil product exports via Estonia in the coming month or two, traders said on Friday, as the European Commission urged Russian companies to keep to their supply obligations.
One industry source said Russia would cut rail exports to Estonia by 2 million tonnes in the next 1-2 months. That would be the bulk of trade on the route, which carries 25 million tonnes a year, a quarter of Russia's oil products exports.
"Cargo owners are redirecting deliveries to the river, to St Petersburg," the source said. Russian railways have denied closing the railway route to Estonia.
A railways spokeswoman said on Thursday that traders were assuming wrongly that maintenance on the line -- part of planned annual repairs -- was a part of a political row between Moscow and Tallinn. Nobody was available to comment.
The apparent supply cut coincides with protests in Moscow over Estonia's relocation of a Soviet war memorial and could revive Western fears of the Kremlin using its energy influence as a political weapon against its ex-Soviet neighbors.
Russian supplies of gasoline, diesel and fuel oil sent via Estonia, are re-exported to northern Europe.
The European Commission called on Friday on Russian firms to meet their obligations to deliver energy supplies to Estonia regardless of technical problems.
Estonian Foreign Minister Urmas Paet wrote in an article in Swedish daily newspaper that Russia was acting as if the Soviet Union still existed. Estonia has previously received support in its dispute with Moscow from the United States and NATO.
One oil trader said the Yaroslavl and Moscow refineries, which traditionally export fuel oil via Estonian ports, were not going to use the route for several weeks.
The Yaroslavl refinery is jointly owned by Gazprom Neft, the oil arm of gas monopoly Gazprom, and BP's Russian venture TNK-BP. The Moscow plant is also partly owned by Gazprom Neft.
The same trader also said TNK-BP's Ryazan refinery had redirected its 0.05 ppm (parts per million) diesel to the Mediterranean from the Northern European market.
Traders said the high quality fuel, traditionally in demand in northern Europe, was likely to be sold at a discount in southern Europe, where high quality diesel is in less demand.
ST PETERSBURG LOADING TO GROW
Russia exported 1.868 million tonnes of refined products via Estonia in March, including 1.340 million tonnes of fuel oil, 249,173 tonnes of diesel, 185,334 tonnes of gasoline and 85,683 tonnes of jet fuel.
It also exports around 230,000 tonnes of light crude grades as well as smaller volumes of liquefied petroleum gas (LPG) and bitumen.The port of St Petersburg is expected to handle the cargoes redirected from Estonia, which may push its 2007 volumes above the planned 12 million tonnes, a port source said.The port loaded 619,000 tonnes of fuel oil and 287,000 tonnes of diesel in April.
(Reuters)