Russian oil shipments to Europe at 10-year-low Russian oil shipments to Europe have slumped to a 10-year low, forcing refineries across the continent to pay more for scarce supplies. Russia is set to ship just 2.1m barrels of oil a day to Europe in July, according to loading schedules, as the country's fast-growing refining sector consumes more oil and Moscow's policy of increasing exports to China bears fruit. As a result European refineries are facing higher costs. In Europe Russian Urals crude is trading at a premium to Dated Brent, the European benchmark, according to Platts data, despite being of a lower quality. Russian exports to Asia have climbed rapidly from a trickle in 2010 to almost 500,000 barrels a day as Moscow has inked high-profile deals to supply China through the newly built Eastern Siberia-Pacific Ocean pipeline. In June Rosneft agreed to double shipments to China in a $270bn deal. "From a Russian point of view it makes sense to redirect exports to rising demand in Asia, but that is creating shortages in Europe, where output from the North Sea is also in decline," said Amrita Sen at the Energy Aspects consultancy, which analysed loading schedules for the Financial Times. Russian energy companies" preference for exporting finished products, such as diesel, instead of crude, is also limiting exports to Europe. Russian refineries are processing more than 5m barrels of oil a day, up by a quarter since 2005. In recent months, analysts say many smaller Russian energy companies have added to competition for limited crude supplies, after Rosneft cancelled some domestic supply contracts following its takeover of TNK-BP. European refiners are already facing a shortage of the type of medium heavy crude oil produced in Russia after EU states stopped oil imports from Iran as a result of the US-led sanctions programme. High Urals prices are a blow to European refining companies such as Hellenic Petroleum of Greece, Repsol of Spain, and Galp of Portugal, which have invested in upgrades in recent years to process relatively heavy crudes, such as Urals. "A lot of refineries have upgraded so they can take medium crudes but when the price relative to Brent is strong, they don't benefit as much," said Laura Webster, an analyst at Bank of America Merrill Lynch. Eastern European refiners such as Neste Oil of Finland, PKN Orlen of Poland and MOL Group of Hungary, which all source significant volumes of crude from Russia, may be particularly affected, according to analysts. However some of those companies have been making deals to secure supplies of Urals via the Druzhba pipeline system. PKN, for example, signed a $7bn agreement with Rosneft to take crude via Druzhba until June 2016 last month. David Wech, managing director at JBC Energy in Vienna, said such deals may have increased pipeline exports to Europe by as much as 100,000 b/d since the start of the year, partially offsetting the decline in seaborne trade with Europe.