Recently, geographical advantage has been the game-changing factor when deciding on an oil supplier for Asian end users. Thus, Kozmino, Russia’s Pacific oil port, dispatches record volumes of Russian oil to Asia. Small ships ply the route between Kozmino and North Asia in three days, compared with journeys of a month for supertankers from the Middle East to Asia. Nowadays, East Siberian Pacific Ocean Pipeline oil (ESPO) is being delivered to China, South Korea, and Japan. Great demand has pushed ESPO’s price to the highest since July versus benchmark Dubai crude, according to industry consultant KBC Energy Economics. “Russia is sending more and more crude to Asia at the expense of Europe, while interest in offshore storage has returned and freight rates have increased,” Ehsan Ul-Haq, a senior market consultant at the UK-based KBC commented on. Buyers from the Asian region are interested in long-term contracts with Russian companies. The current trends in the international politics account for such interest. Indeed, from the viewpoint of Asian end users, Russia is a more reliable partner compared to the Middle East oil exporting countries that opt for closer cooperation with the United States. The Eastern Siberian – Pacific Ocean pipeline was brought into operation in two stages. The pipeline links Siberian town Taishet to oil port Kozmino in the Far East. The pipeline supplies massive volumes of Russian crude to Asia-Pacific markets. Stronger demand in Asia partially offsets weaker demand in traditional European oil markets. “Asia is the only market that is witnessing any increases in oil demand,” said Hong Sung Ki, a commodities analyst at Samsung Futures Inc. in Seoul. “With Russia and OPEC producers both eyeing the Far East, the price war has begun for bigger market share and we’re likely to see more and more of it.”
