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Oil prices surged to the highest since 2014 this year, in part on the back of tensions between Russia and the west over Ukraine.
Any scenario in which westbound flows from the world’s second-largest crude exporter slump would have a big impact on what is an already tight oil market.
The reality, though, is that Europe and Russia’s mutual oil-market dependence would make any major disruption in exports surprising. The maps and charts below illustrate why it would be economically destructive for both Moscow and Europe if tensions were ever to result in a significant reduction in westbound crude.
Russian President Vladimir Putin has said his country has no plans to invade Ukraine.
About 2.3 million barrels of Russian crude -- about $75 billion a year at current spot prices -- heads west each day through a network of pipelines to export terminals on the Baltic and Black Seas, as well as pouring directly into refineries in central and eastern Europe.
Flows of refined products -- mostly diesel, fuel oil and naphtha -- supplement that revenue.
Western Ports
Russia has three main western ports that load crude oil onto tankers for refineries in Europe and beyond: Primorsk and Ust-Luga in the Baltic Sea, and Novorossiysk in the Black Sea. They are fed by the country’s sprawling pipeline network.
Heading West
About 2.3 million barrels a day of Russian crude heads west through a network of pipelines and ports
Sources: Bloomberg; AW Consulting
Druzhba Pipeline
Several large refineries in eastern Europe and Germany depend on crude delivered along a major pipeline corridor from the oil fields of Siberia -- the Druzhba pipeline -- which in English means ‘Friendship’.
Druzhba has two main routes to Europe: the first is a northern line servicing the port of Ust-Luga port as well as refineries in Poland and Germany. The southern leg is smaller and goes through Ukraine to Hungary, Slovakia and the Czech Republic.
Druzhba’s Dependents
Six European refineries depend on crude delivered through the Druzhba system for all, or part of, their feedstock
Sources: Bloomberg; AW Consulting
Germany and Poland
In terms of direct Druzhba flows to refineries, Germany gets most, followed by Poland.
Transneft PJSC, Russia’s pipeline operator, delivered 35.9 million tons of crude through Druzhba to European refineries in 2021, equivalent to 720,000 barrels a day. That was down more than 20% from the volume supplied in 2020, and 40% below the post-Soviet peak of 1.18 million barrels a day set in 2006.
Poland has been reducing its dependence on Russian crude through the reversal of a pipeline between Gdansk on its Baltic coast and the Plock refinery, located on the Druzhba pipeline. To take advantage of the ability to ship crude inland from the coast, it has signed long-term supply deals with Saudi Arabia.
Russia’s state oil company also owns a majority share of a refinery in Germany.
Druzhba Flows
Russia delivered about 720,000 barrels a day of crude to European refineries through the Druzhba pipeline in 2021
Source: Transneft and Centre for Global Energy Studies
Most Reliant
Nevertheless, Russian crude remains vital to most of the refineries along the route of the Druzhba line.
The next map shows how much European countries depend on Russia as a source of their imported crude. Several nations on the route of the Druzhba pipeline rely on Russia to meet more than 80% of their import needs.
Countries further west, with neither the pipeline links nor the historical ties, are far less reliant.
Crude Dependency
Most of Europe's eastern countries still depend on Russia for more than half of their crude imports
Source: Eurostat, data for 2019
Seaborne Barrels
Russia also exports large amounts of crude by sea to European markets from its three western ports.
Smaller volumes, typically about 330,000 barrels a day, leave Russia through three terminals on its Arctic coast. Cargoes are accumulated in storage facilities near Murmansk for onward delivery.
The map below shows the volume of crude delivered by sea from Russia’s Baltic and Black Sea ports to European customers. Note that some flows to Italy actually end up going to other countries via a pipeline from Trieste.
Russia’s seaborne crude exports reach right across Europe, with Mediterranean countries typically receiving crude from Novorossiysk, while those with predominantly northern coastlines tend to receive supplies from Primorsk and Ust-Luga.
Crude by Sea
Russia exports crude from its Baltic and Black Sea ports across Europe
Source: Vessel tracking data monitored by Bloomberg
Refined Fuels
Russia also exports refined products, mostly diesel, fuel oil and naphtha. The country has been developing its network of pipelines to carry light products to export terminals on the Baltic and Black Seas. A branch of its products pipeline network extends as far as Hungary.
Products Pipelines
Russia’s products pipelines carry diesel and other light products for export
Sources: Bloomberg; AW Consulting
Diesel
The maps below use data from Eurostat to show the proportion of gasoil and diesel that different countries get from Russia. Flows from Russia accounted for 28% of Germany’s gasoil imports last year and met 9% of the country’s demand, according to data from Eurostat. For Poland, dependence is even higher, with 63% of imports and 15% of demand being met by Russia.
Gasoil Guzzlers
Russia's gasoil and diesel exports penetrate far into Europe
Source: Eurostat, data for 2019
Share of supplies from Russia in total gasoil/diesel imports
Naphtha Too
Russia is an important source of naphtha for refiners in Finland, Sweden and Belgium.
Naphtha from Russia
Russian naphtha is an important feedstock for refiners from Finland to France and Italy
Source: Eurostat
Note: Share of Russian supplies in total naphtha imports in 2020
Fuel Oil
The 27 European Union countries got 21% of their fuel oil imports from Russia in 2020, according to Eurostat. The biggest importers, in percentage terms, were the Baltic states -- Lithuania, Estonia and Latvia -- and Germany, Finland and the Netherlands.
Fuel Oil Flow
Russian fuel oil is important in markets from Finland to Italy
Source: Eurostat
Note: Share of Russian fuel oil in total fuel oil imports in 2020
Mutually Dependent
But there’s a clear two-way dependency.
While Russia supplies a significant proportion of the import needs of many European countries, it also depends on them as markets for its petroleum.
European buyers, excluding Turkey, take 65% of Russia’s Black Sea crude exports and more than 90% of volumes shipped from the Baltic ports.
While Russia has been expanding its exports to Asia with a pipeline to the Pacific coast, it wouldn’t be able to divert any meaningful volumes by pipeline to buyers in Asia were westbound flows to slump for any reason.
So if Europe and the west don’t buy, swaths of Russian oil production would have to halt, or be sent on long voyages on tankers from the Baltic and Black Seas -- through European waters -- to Asia.