Type to search

China’s Sinopec ‘Refusing to Pay High Prices’ for Russian Oil

Refiners from India, Dubai and other Chinese state oil firms have been outbidding Asia’s biggest oil refiner in purchases of Russian oil this month, market traders say

Refiners from India, Dubai and other Chinese state oil firms have been outbidding China's Sinopec in purchases of Russian oil this month
Indian buyers and other traders have been offering more for Russian oil than Sinopec in July, traders say. Workers inspect equipment at a Sinopec shale gas field in Fuling, near Chongqing. File photo: Reuters.


China’s Sinopec Corp scaled back bids for Russia’s ESPO crude oil in July while customers from other countries such as India were offering higher prices, according to trade sources.

Sinopec – Asia’s biggest refiner – has snapped up Russian crude in recent months, although that may just have been capitalising on low prices during a period when Russia’s ESPO lacked Western buyers.

Chinese and Indian oil companies increased their Russian oil imports in May and June, despite Western sanctions on Russia as a result of the Ukraine conflict that have upended the global oil trade.

China has refrained from condemning Russia’s invasion of Ukraine that started on February 24, and in a meeting on February 4 the leaders of the two countries said their friendship had “no limits”.

Sinopec, through its trading arm Unipec, is expected to lift less cargo in July after submitting lower bids to Russian exporters who then sold the oil to trading companies and other Chinese clients that bid higher, according to four sources who participate in the market and declined to be identified.

Sinopec had been the biggest buyer of ESPO, which loads from the port of Kozmino in Russia’s Far East, in the past two months, snapping up an estimated 20 million barrels, according to traders and data from tanker tracker Vortexa Analytics.

Sinopec bid at discounts of about $20 a barrel below the price of Middle East benchmark Dubai on a free-on-board basis for July shipments, similar to what it was paying for cargoes in May and June, while deals were done at $8 to $13 discounts, the sources said.

Sinopec may only lift a very small amount as their bids were too low for the Russians,” said one of the four sources, a China-based trading executive.

A Sinopec spokesman declined to comment on the company’s purchases.

The companies that beat out Sinopec for the ESPO cargoes in July include Dubai-based trader Coral Energy, state-owned firms CNOOC, PetroChina, and Shandong Port International Trade, which is backed by the local provincial government, according to three trading sources and data from Vortexa.

Russia is expected to raise its ESPO exports from Kozmino to a record of 880,000 barrels per day (bpd) in July, according to reports on June 7, from an average of 750,000 bpd in 2022.


Swiss Trader

Swiss-based trader Paramount Energy, which specializes in marketing the output of small, independent Russian producers, is expected to lift around 7 million barrels of ESPO in July, one of the largest buyers, said two sources with knowledge of shipping fixtures.

A regular marketer of ESPO crude to Chinese independent refiners since 2016, Paramount has expanded its China marketing in recent months by working with Chinese state-run trader Zhenhua Oil.

Paramount Energy declined to comment on its July volumes but it said it has delivered Russian cargoes to customers under long-term commercial contracts established before Russia invaded Ukraine.

“The company is working to reduce its trading of Russian crude as these long-term contracts expire, a process that is ongoing,” a company spokesperson said.

Top Russian exporter Rosneft is also likely sending more ESPO shipments to India under its recent supply agreement with state-run Indian Oil Corp.

Before the war, China’s independent refiners purchased nearly all of the ESPO cargoes available and the crude rarely flowed to India because the longer voyage reduced the profitability of purchasing it.


  • Reuters with additional editing by Alfie Habershon



Read more:


China’s Sinopec Posts Profits Rise, Takes Hit on LNG Imports


China’s Sinopec Plans Biggest Ever Capital Expenditure


Russian Oil Imports Boost Profits at India’s Reliance Industries



Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.


AF China Bond