Russia’s exports of naphtha, a key ingredient for making petrochemicals, to Singapore are set to reach their highest level this year in May, as the country’s refineries recover from recent drone attacks. Traders and analysts estimate that Singapore’s imports of Russian naphtha will rise to around 415,000 metric tons in May, with some projections reaching nearly 500,000 tons.
The increase in exports is attributed to the waning impact of the drone attacks by Ukraine on Russia’s oil processing facilities since the start of the Ukraine war. Armaan Ashraf, the global head of natural gas liquids at FGE, a consultancy, said, “The refinery (attack) impact wanes off through May and June, which is why we may expect higher exports from Russia.”
Singapore’s total naphtha imports in April reached 998,408 tons, up from 920,626 tons a year earlier, with Russian naphtha accounting for 329,955 tons, the highest this year. This reflects the rising blending demand for naphtha ahead of the peak gasoline demand season in the summer, according to a Singapore-based petrochemical trader.
The trend is expected to continue as more refining capacity comes online in Russia. Rosneft’s export-oriented Tuapse oil refinery, one of the largest in Russia’s south, has resumed processing, with loadings expected to rise by about 16% to 180,000 tons in May. Additionally, Novatek, a major Russian gas producer, plans to start test operations for a new 3 million metric tons-per-year processing unit at its gas condensate complex in the Baltic Sea port of Ust-Luga in mid-June, which could enable it to increase naphtha exports to between 550,000 and 600,000 tons a month.
The increase in Russian naphtha exports to Asia, including China, Singapore, Taiwan, and Malaysia, comes as the region remains structurally short of the commodity and relies on Northwest Europe, the Mediterranean, and the U.S. to meet the shortfall of about 2 million tons per month. However, Russia’s naphtha exports to Asia have increased significantly after Western sanctions on its oil product exports upended trade flows, keeping margins subdued due to high supplies amid sluggish demand.