EU faces supply shortages after Russian oil ban – Bloomberg – RT Business News

With an impending ban on the supply of Russian petroleum products, the European Union must find alternative sources for its future fuel imports, which could be quite difficult, reports Bloomberg.

The outlet reported on Friday that three new refineries in the Middle East could go a long way in helping the EU replace 600,000 barrels per day of Russian diesel, but these have faced numerous delays. None of them are at full capacity yet and there could be even more delays, according to the report.

“To replace Russian supplies, Europe is increasingly turning to Middle Eastern producers,” JPMorgan Chase analysts reportedly told clients.

However, according to Ahmed Mehdi, London-based commodities analyst at Renaissance Energy Advisors, “Refining projects in the Middle East are prone to commissioning delays.” He told Bloomberg that “Europe will not benefit from the additional barrels before the end of 2023.”

The report says the new refineries are located in Saudi Arabia, Kuwait and Oman.

Saudi Aramco’s Jazan refinery in the kingdom’s southwest, which would be designed to process 400,000 barrels of crude a day, is still in the ramp-up phase. It will have to produce fuels that meet strict European emissions specifications, according to consultancy Vortexa. The facility is also close to the border of war-torn Yemen, making it “particularly vulnerable” to drone strikes, investor advisory firm Greenmantle has warned.

Another Middle Eastern state, Kuwait, plans to quintuple diesel flows to the EU this year to 50,000 barrels per day and double jet fuel shipments. It will achieve this by increasing production at its massive Al Zour refinery with a capacity of 615,000 barrels per day, according to the report. The plant finally started operating last year, about two years late. The national energy company plans to start up the second of the three lines this month and the last in April.

Meanwhile, Oman and Kuwait are reportedly building a 230,000 barrel per day refinery at Duqm on the Indian Ocean coast. The facility was originally scheduled to become operational in 2020, but this has been postponed until later this year. “Most oil traders covering the Middle East do not expect first shipments until at least the end of 2023,” writes Bloomberg.

The EU’s ban on all maritime imports of refined fuels from Russia is set to come into force on February 5 after gaining approval from all 27 EU member states. The bloc is struggling to agree on a price cap for Russian petroleum products, with some members seeking a lower cap.

Brussels had already banned maritime crude oil imports from Moscow in December. The EU, G7 countries and Australia have also set a price cap of $60 a barrel, which prevents Western companies from providing insurance and other services to shippers of Russian oil, unless the cargo is purchased at or below the fixed price.

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