By Olga Yagova, Gleb Gorodyankin and Dmitry Zhdannikov
MOSCOW/LONDON, July 11 (Reuters) - U.S. crude exports aregaining traction in Europe as even Ukraine turns into asignificant consumer of American barrels at the expense ofRussian supplies amid heightened U.S. political pressure onMoscow and problems over contaminated Russian oil.
Ukraine this month received its first ever barrels from theUnited States, according to Refinitiv Eikon flows data, as thetanker Wisdom Venture unloaded 80,000 tonnes of Bakken crude inOdessa on July 6 for the Kremenchug refinery, the port said.
Russia often struggles to export oil from the Black Sea viathe narrow Turkish Bosphorus and Dardanelles straits due tocongestion, making the arrival of the U.S. crude into the BlackSea from the Mediterranean even more extraordinary.
The oil was sold by BP to Ukrtatnafta, sources said,adding Ukrtatnafta will receive a further similar amount of U.S.crude around July 24, and more purchases were likely in August.
"The Ukrainian oil industry is set to rise from the asheswith its new president (Volodymyr) Zelenskiy, so it's an obviousnew market for the United States, though the price matters," atrader in a European oil major said.
Ukraine's oil sector, formerly mostly operated by Russiancompanies, has struggled since geopolitical tensions between thecountries escalated in 2013-2014.
Since then most of the country's refineries have remainedclosed and the only oil supplied to Odessa is Azeri Light,sourced by Azerbaijan's SOCAR. Since January 2019 it hassupplied 320,000 tonnes, Refinitiv Eikon flows data shows.
RELIABLE ALTERNATIVE
U.S. oil has yet to become a common feedstock for Europeanbuyers, who complain about volumes and varying quality, butrecent market changes have shown American barrels can be areliable alternative, traders said.
The crisis that erupted at the end of April overcontaminated Russian oil delivered through the Druzhba pipelinecaused buyers to look for alternatives.
"Refiners who were solely reliant on Druzhba supplies havebeen forced to test alternatives and could easily make thesetheir new baseload barrels given the contamination issue hastaken so long to sort out," said Matthew Holland at EnergyAspects.
As a result, U.S. supplies to Europe have risen steadilysince May and have remained above 2.5 million tonnes a month.
For example, Poland, which had not imported U.S. crude sinceJune 2018, purchased three cargoes of WTI this year - one fordelivery to Gdansk in May and two in July, the flows data shows.
German's Wilhelmshaven imported one cargo in June and willreceive another two in July. According to traders, some of thecargoes are set for Ruhr Oel's Gelsenkirchen refinery.
In the Mediterranean, a typical buyer of Urals crude Italy,increased U.S. imports to a monthly record of nearly 700,000tonnes in June, Refinitiv Eikon data showed. Traders said buyerswere looking to replace Urals volumes for both Italian andGerman refineries, which receive transit volumes via Triest.
Spain has also increased U.S. crude oil imports, recentlypurchasing 300,000 tonnes each for June and July arrival,Refinitiv Eikon data shows.
Active Urals buyers Greece and Croatia also took severalcargoes of U.S. oil. Some 215,000 tonnes were imported in Greecein May-June, the data shows, while one cargo of Eagle Fordcondensate was unloaded in Croatia's Omisalj in May.
"Russia is a major oil supplier, but we like to have achoice. In recent years Russian supplies have been regularlyconnected to some sort of risk - sanctions, contamination etc.It makes you a bit nervous trading it. U.S. crude has itsdisadvantages, but it's always available nowadays and rathercheap at times," a Mediterranean trader said.
SEEKING A BENCHMARK
Russia has been looking for ways to add Urals crude to theNorth Sea basket to play a role in the world's oil priceformula, but so far such attempts have failed.
U.S. crude is a new product in the market and some priceagencies are considering adding it to the basket. Among recentmoves is the start of U.S. crude oil grades trading in thePlatts window along with North Sea grades.
The first deal with WTI crude oil for Rotterdam delivery wasdone in the Platts window last week.
S&P Platts has not added WTI to dated Brentcalculations.
Pricing agency Argus Media added U.S. WTI crude to its newNorth Sea dated assessment from Feb. 15.
(Reporting by Dmitry Zhdannikov, Olga Yagova, Gleb Gorodyankin;editing by David Evans and Kirsten Donovan)
BP (BP.)
