The Art of the Deal: First Sanctioned ESPO Cargo Discharges at China’s Dongying Port

The Aframax Si He, which loaded 744 kb of ESPO crude from Russia’s Kozmino port on January 28, successfully discharged its cargo at Dongying port in China’s Shandong province on February 10. The cargo would be considered in violation of US sanctions, as it was loaded after Washington’s waiver deadline, which required shipments to be loaded before January 10.

While Beijing has repeatedly opposed US sanctions, calling them 'unilateral and illegal,' state-owned enterprises, major independent companies, and financial institutions have adopted a more cautious stance, fearing potential repercussions due to their exposure to US technology and the financial system. In early January, state-owned Shandong Port Group (SPG) announced a ban on tankers listed by the OFAC from calling at its facilities. This preemptive move led several newly sanctioned tankers—despite meeting the US waiver conditions—to wait at anchor for days before receiving the green light to discharge in Shandong.

However, the discharge of the Si He doesn't suggest that SPG has changed its policy. Instead, it's the result of the art of the deal, as US President Donald Trump proudly put it. A market insider told Kpler that Shandong Port Group recently divested its stakes in two ports in Dongying, namely Jingang and Haixin, allowing them to operate independently, outside of SPG’s control. Based on public information, Haixin is now fully owned by a private company, while Jingang is 59% controlled by Baogang Logistics, a private firm, with the remaining stake held by a local state-owned company.

Looking ahead, more sanctioned tankers are expected to discharge ESPO crude cargoes at the two ports in Dongying, which is positive news for Russian oil sellers who are scrambling to find workarounds to sustain their trades. However, sanctioned tankers carrying other crudes, such as Iranian and Venezuelan oil, are unlikely to follow suit, as the two ports can currently only accommodate Aframax-sized tankers. Iranian and Venezuelan crude are typically transported on larger vessels.

Crude oil exports from Russia’s Nakhodka by destination, kbd

Source: Kpler

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