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. Last Updated: 07/27/2016

Rosneft Buys Local Crude Oil

State-controlled oil firm Rosneft has appeared for the first time on the local free crude oil market by buying volumes to increase processing at its refineries, trading sources said Wednesday.

The sources said Rosneft bought around 200,000 tons of crude from the country's No.4 oil firm Surgutneftegaz for September delivery to its Samara group of refineries.

The country's free crude oil market amounts to around 2.8 to 3.5 million tons per month, with firms that have excess refining capacity seeking to buy crude from companies with excess production.

The sellers typically include Surgutneftegaz and No.3 oil firm TNK-BP, while buyers are represented by the independent Bashkir group of refineries and the Moscow refinery.

Pricing details of the Rosneft-Surgutneftegaz deal were not available, but traders said first deals on the free crude oil market for September delivery showed prices declined by 15 percent from the previous month to 6,950-7,200 rubles ($269-$278.6) per ton at West Siberian wellheads.

Rosneft bought crude as global prices fell while export duties, which are revised only once every two months, remain high, making crude oil export operations less profitable than domestic refining and subsequent exports of refined products.

"In the current environment, it is more profitable to sell crude on the local market than to channel it for exports," said a trader with a Russian company.