Essar seeks alternatives to Russian diesel in the UK amid outcry over shipments

Essar, the owner of the UK's 205,000 b/d Stanlow refinery, is looking for alternative sources of diesel to supply its UK retail fuel network as pressure mounts on companies to cut ties with Russia over its invasion of Ukraine.

Last week, Essar said it turned away two cargoes of non-Russian origin crude, which would have been delivered in Russian-flagged tankers after the UK banned vessels on March 1 that are Russian-owned, operated, controlled, chartered, registered, or flagged from UK ports. But the restrictions do not include Russian cargoes carried by other vessels.

Essar confirmed that it took delivery of a Russian diesel cargo on March 3 at the UK's Tranmere oil terminal which had departed for the UK on Feb. 22, before the invasion of Ukraine and the introduction of the UK's Russian shipping ban.

"We have been working urgently to find alternative sources of diesel while also ensuring uninterrupted supply of fuel to the northwest of England," a spokesperson for the company said echoing similar comments made by Essar in a statement on March 4.

Despite the UK's provision allowing Russian oil and goods to be imported into the UK on non-Russian-affiliated vessels, the UK's Unite union said on March 5 that its members would "not unload any Russian oil regardless of the nationality of the vessel which delivers it".

The German-owned Seacod tanker docked at Tranmere on March 3 where it offloaded part of its cargo, according to Platts cFlow trade-flow analytics software. According to loading schedules, the diesel cargo was supplied by Litasco, the trading arm of Russia's second-largest oil company Lukoil, from Russia's Baltic Sea port Primorsk.

Russia is the second-biggest supplier of oil products to the UK providing 5.86 million mt in 2019 of mostly diesel, according to official government data. UK diesel imports totaled around 15 million mt in 2019.

Pressure on companies to cut all ties for Russian energy in spite of a carve-out of existing EU sanctions to sidestep energy exports from Moscow escalated last week.

Two Cyprus-flagged LNG tankers that were bound for the UK's Isle of Grain terminal changed course last week amid discontent among port workers over their Russian cargoes.

A number of European countries have also said they are also looking to follow the UK's lead in blocking access of Russian-affiliated tankers and shipping to their ports but have deferred a decision on the move to the European Union.

Separately, the UK refining industry association UKPIA said its members are in talks with the government to source adequate diesel imports to cover demand.

"Companies are in regular dialogue with the government to ensure that fuels continue to be available to the public following the events in Ukraine and resulting sanctions on Russian vessels," UKPIA said.

"The restrictions on Russian owned, controlled, chartered and operated vessels are understood by fuel importers, and companies that have previously used such vessels are implementing contingency plans such as using alternatives to ensure products continue to be available."

UKPIA also welcomed the planned release of compulsory oil stocks organized by the International Energy Agency last week which will "send a unified and strong message to global oil markets that there will be no shortfall in supplies".

The UK has committed to releasing 2.2 million barrels of oil stocks as part of the IEA's 61.7 million barrels coordinated release of strategic oil stocks in response to the Ukraine conflict.