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. Last Updated: 07/27/2016

Crude Exporters Start to Master Red Tape

Russian crude oil and product exports are fighting their way through a thicket of bureaucracy and picking up pace as traders become more familiar with new customs formalities.


The flow of Urals Blend crude leaving Black Sea ports was reduced to a trickle earlier this month, but Moscow-based trade sources reported brisk business this week and good demand.


"We have already sold most of our January program. We still have one or two cargoes," a trader for a major exporter said Friday.


"We had some reduction in volume in January compared with December. It's difficult to say what caused this, but it may have been largely due to our reduced state needs," he said without elaborating.


Russian oil exports, mostly on behalf of the state, have been plagued by chaos surrounding licensing and quotas. Political upheavals have not helped, with many senior officials distracted from their regular duties.


An official from the Czech state refinery said Russian oil supplies to the Czech Republic and Slovakia had been cut off this week because of delays in issuing quotas and licenses.


Officials at the Fuel and Energy and Foreign Economic Relations Ministries, responsible for the permits, declined to comment. But a source at state pipeline company Transneft confirmed administrative snags.


Traders hesitated to predict January exports.


"The situation is confused, with different elements adding to the confusion," one Western trader said.


New customs requirements aimed at cracking down on capital flight were slowing down the export process, but this was seen as a short-term problem.


Trade sources expected no significant impact from this week's government reshuffle, although the departure of radical reformers could lead to further declines in the ruble which would go hand-in-hand with a jump in inflation.


This may be negative for producers. They complain that increases in equipment and other costs tend to outpace fuel price rises, which are still controlled by the government to prevent other industries from going under.


They will continue to sell as much as possible for hard currency.