Global oil producers are looking to Russia to boost reserves amid unrest in northern Africa and the Middle East, despite the high prices and weak margins that are forcing run cuts in Europe.
On 3 March, Total SA announced an agreement to buy 12% of OAO Novatek for approximately US$ 4 billion. The French explorer plans to raise its holding to 19.4% within three years, while also joining the Yamal LNG project. Russia’s vast resource base and relative soiciopolitical stability are making it an increasingly attractive nation for energy development.
However, spot differentials on Russian medium sour Urals slipped for a second day on 3 March, falling below US$ 3 discount levels.
Tamoil, the Libyan oil company, has announced a reduction in operations at its 72 000 bpd refinery in Switzerland, making it the first refiner in Europe to confirm run cuts due to negative margins.
Besides economic run cuts, some European refineries are undergoing maintenance work. Royal Dutch Shell has halted a crude distillation unit and restarted a gasoline producing fluid catalytic cracker at its Pernis refinery in the Netherlands until April. Furthermore, two of Total’s refineries in France are undergoing continued work, while the company’s UK based Lindsey refinery has kept one crude distillation unit shut since last year.