Exclusive: China state refiners shun new Russian oil trades

SINGAPORE, April 6 (Reuters) – China’s state refiners are honouring existing Russian oil contracts but avoiding new ones despite steep discounts, heeding Beijing’s call for caution as western sanctions mount against Russia over its invasion of Ukraine, six people told Reuters.

State-run Sinopec (600028.SS), Asia’s largest refiner, CNOOC, PetroChina (601857.SS) and Sinochem have stayed on the sidelines in trading fresh Russian cargoes for May loadings, said the people, who all have knowledge of the matter but spoke on condition of anonymity given the sensitivity of the subject.

Chinese state-owned firms do not wish to be seen as openly supporting Moscow by buying extra volumes of oil, said two of the people, after Washington banned Russian oil last month and the European Union slapped sanctions on top Russian exporter Rosneft (ROSN.MM) and Gazprom Neft (SIBN.MM). read more

“SOEs are cautious as their actions could be seen as representing the Chinese government and none of them wants to be singled out as a buyer of Russian oil,” said one of the people.

Sinopec and Petrochina declined comment. CNOOC and Sinochem did not immediately respond to a request for comment.

China and Russia have developed increasingly close ties in recent years, and as recently as February announced a “no limits” partnership, and China has refused to condemn Russia’s action in Ukraine or call it an invasion. read more

China has repeatedly criticised western sanctions against Russia, although a senior diplomat said on Saturday that Beijing is not deliberately circumventing sanctions on Russia.

China, the world’s largest oil importer, is the top buyer of Russian crude at 1.6 million barrels per day, half of which is supplied via pipelines under government-to-government contracts.

Sources expect China’s state firms to honour its long-term and existing contracts for Russian oil but steer clear of new spot deals.

A drop in China’s imports of Russian oil could prompt its giant state refiners to turn to alternative sources, adding to global supply concerns that had driven benchmark Brent oil prices to 14-year highs near $140 per barrel in early March after Russia invaded Ukraine on Feb. 24. read more

Brent futures have since eased, to below $110, after the United States and allies announced plans to release stocks from strategic reserves. read more

‘RISK CONTROL AND COMPLIANCE FIRST’

Before the Ukraine crisis, Russia supplied 15% of China’s oil imports – half of that via the East Siberian and Atasu-Alashankou pipelines and the rest by tankers from its Black Sea, Baltic Sea and Far East ports.

Unipec, the trading arm of Sinopec and a leading Russian oil buyer, has warned its global teams at regular internal meetings in recent weeks against the risks of dealing…