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Finland imports oil from Norway, the UK and the US to replace the Russian Urals

Finland, one of the EU countries most dependent on Russian oil, stopped importing Urals crude last year, while increasing purchases from Norway and supplying barrels to the UK and US, according to data from Refinitiv Eikon.

EU countries banned all seaborne oil imports from the Russian Federation from December 5 last year, but many countries have already cut their purchases before that date.

According to an annual report by Neste Oil, the state’s sole refiner, Finland will import its last export oil from the Urals in July 2022, ceasing purchases of Russian oil, including long-term contracts.

Russian oil imports, at 1.5 million tonnes, will account for just 17% of Finland’s total crude imports in 2022, up from 84% a year ago. Supply from Norway more than quadrupled to 5.65 million tonnes or 65% of the total.

Graph – Finland’s oil imports in 2022

“Neste does not disclose detailed information about its past or future suppliers of crude and raw materials,” the company’s media representative told Reuters, citing Markku Korvenranta, executive vice president of petroleum products.

Finland relies solely on the Urals to fuel its refineries, as proximity to the Russian ports of Primorsk and Ust-Luka has reduced tanker trips and made them cheaper.

Graph – Finland’s oil imports in 2021

The closest alternative to Urals in the region is Norwegian oilman Johan Sverdrup, from which Finland imported about 3.5 million tonnes, or about 10% of production, last year, according to data from Refinitiv Eikon.

Finland imported the Norwegian breeds Ösberg, Troll and Gudren, as well as the Forties and other breeds from the United Kingdom. It imported 0.6 million tonnes of US WTI.

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Prices for Oseberg and Troll averaged $103 per barrel in the year to March 2023, while Urals averaged $69 per barrel, according to Refinitiv data.

According to traders, Johan Sverdrup typically trades a few dollars per barrel below Oseberg and Troll.

Transporting North Sea oil grades to Finland costs around $2-3 per barrel, while Urals transport costs between Russian Baltic Sea ports and Porvoo, Finland are less than $0.50 per barrel.

Margins were good last year as EU countries cut their purchases of Russian petroleum products and global prices rose, traders said, although a shift in procurement increased Neste’s refining costs.

The full-year gross petroleum product refining margin averaged $23.4 per barrel in 2022 and $9 per barrel in 2021, a Neste representative said, citing the company’s financial statements last year.