Chinese oil refining companies are beginning to terminate contracts with Russian suppliers. According to Bloomberg, the reasons are related to fears of secondary sanctions from the US, the UK and the European Union. Deals with Lukoil and Rosneft, two Russian giants that traditionally provide a significant share of supplies to Asia, have been hit.
The largest players in the Chinese oil sector, both state-owned and private, have begun to abandon existing contracts. Among them are Sinopec and PetroChina. Consulting firm Rystad Energy estimates that the termination of contracts has affected about 45% of China’s total imports of Russian oil. ESPO oil, a key grade for the Asian market supplied via pipeline from Eastern Siberia, has been particularly hard hit.
On 15 October, the UK imposed restrictions on Lukoil and Rosneft, as well as the Chinese company Shandong Yulong Petrochemical. Sanctions against Chinese buyers of Russian oil were also included in the 19th package of EU sanctions. The US added Lukoil, Rosneft and their subsidiaries to its sanctions list on 22 October.
