China’s Shandong Port International Trade Group, a provincial government backed commodities and oil trader, has secured a rare shipment of Russian crude oil for arrival into east China this month, according to traders and a company statement.

This marks the first such deal under which a Chinese firm other than Beijing’s national oil giants has directly bought oil from a Russian supplier, as global oil majors and traders phase out dealing in Russian oil to pressure Moscow over its invasion of Ukraine, which Moscow has called a “special operation”.

In a statement posted on the Shandong Port group’s official Wechat account on Tuesday, the company said a 100,000 tonne (730,000 barrel) crude oil shipment loaded in recent days was scheduled to arrive at Shandong province in the middle of this month.

“Company successfully completed a one-stop service that covers the full chain of global crude oil trade,” said the statement.

Although it did not specify the origin of the shipment, trading sources who closely monitor Russian oil sales to China said the cargo size and the shipping voyage would indicate it is a cargo of ESPO blend, Russia’s flagship export grade from its Far East port Kozmino.

A company representative declined to comment on the origin of the oil.

The company also said it had secured $85.5 million worth of credit from a Shanghai-based financial institution for the purchase, without mentioning the name of the lender.

Traders said bank credit to finance Russian oil purchases is hard to come by as financial institutions fear they may be exposed to possible secondary Western sanctions.

The United States has banned purchases of Russian oil and the European Union is the process of outlining a detailed proposal to wean its refiners off Russian oil.

Leading western trading houses including Vitol and Trafigura are both winding down purchasing oil from top Russian suppliers following a European Union-imposed deadline on May 15.

Shandong Port International Trade Group is a unit under Shandong Port Group established in 2019 which merges the businesses of the province’s top ports at Qingdao, Rizhao, Yantai and Baohaiwan.

The port group handles approximately a quarter of China’s crude oil imports, the world’s largest.

Shandong is also China’s refining hub and is home to more than 40 independent oil refiners.
Source: Reuters (Reporting by Chen Aizhu; Editing by Kim Coghill)