by Mish Shedlock, Mish Talk:
I describe the roundtrip process in which Russian oil refined in Italy makes its way to to the US. It’s a real hoot.
The Wall Street Journal has an interesting video that describes How Russian Crude Avoids Sanctions and Ends Up in the US.
With an upfront ad, that is a free WSJ video link.
The Lukoil Connection
TRUTH LIVES on at https://sgtreport.tv/
Sanction Avoidance Process
- US sanctions are on crude oil, not refined products.
- Lukoil, Russia’s second largest oil and gas company was not sanctioned by the US.
- Lukoil’s refinery in Sicily is the second largest in Italy and fifth largest in Europe.
- A Lukoil refinery in Italy once processed crude from multiple countries. Now it inputs are 93 percent from Russia.
- After refining, the country of origin is Italy, not Russia. This is due to longstanding practice of changing the country of origin to where oil is refined.
- The refined product then makes its way Exxon and Lukoil plants in New Jersey and Texas.
- Lukoil still has a gas station presence in the US and it distributes products to eleven states.
Lukoil Stations in 11 US States
Note: Most of the 230 Lukoil gas stations in the US are owned by individual American franchisees, not the oil giant itself.
Understanding the Process
- The US has sanction exclusions for oil “substantially transformed into a foreign-made product.”
- US refiners cannot process Russian crude, but Italian refiners can, then distribute the product here.
- In return, US can send its refined products to the EU, completing the round trip!
Lukoil is 6th largest refiner in Europe. It went from processing 30% Russian oil to 93%. That’s a pretty big sieve even if amounts to US are small.
Conveniently timed for the US election, European bans on Lukoil do not come into play until December 5.