Potential for imports of Russian oil dogged by challenges
While Russian crude oil is considerably cheaper than that from the Middle East, it is also lighter, making it unsuitable for most of Thailand’s refineries
Thailand has once again held discussions with Russia about energy cooperation between the two countries, particularly the purchase of oil but several challenges stand in the way, Deputy Prime Minister and Energy Minister Pirapan Salirathavibhaga said following his conversations with Russian Deputy Minister of Energy Sergey Mochalnikov.
While Russian oil is currently cheap, importing it could incur high transportation costs, and private-sector purchases of Russian oil are currently not feasible, Pirapan explained.
A source from the Ministry confirmed that Russian crude oil is cheaper than Middle Eastern oil but added that Russian oil is light oil, which is unsuitable for production in Thailand. Therefore, Thai refineries might not find it cost-effective to process.
The idea of using light oil from Russia has been explored in the past but was abandoned due to the unsuitability of Thai refineries.
While Thailand's six refineries have advanced in recent years, it is not certain if processing light oil would be cost-effective and would likely necessitate adaptation, which might not be economically viable.
Even though light oil is cheaper, the need to add substances to produce diesel would not allow for the production of sufficient quantities to justify the costs, especially considering that over 70% of Thailand's oil consumption is diesel. Middle Eastern oil is better suited for producing diesel in larger quantities, the ministry said.
During the tenure of Deputy Prime Minister and Minister of Energy Supattanapong Punmeechaow, the idea of importing Russian oil was considered in the context of the Russia-Ukraine war, when Russian oil was significantly cheaper. However, the idea was shelved due to quality concerns and transportation costs.
In 2008, during the administration of Prime Minister Samak Sundaravej, Thailand sought to buy Russian diesel, acknowledging the lower quality but cheaper price. The plan at that time was to import 300,000 tons per month, accounting for 25% of domestic consumption, primarily for cooperative members, including truck operators, without impacting the overall oil market.
Samak assured there would be no personal gain from this initiative, leaving it to private companies to manage on a year-to-year contract basis. Former Deputy Leader of the Democrat Party, Alongkorn Ponlaboot, emphasised that Russian diesel would provide temporary relief during the oil price crisis, urging careful consideration due to quality and refining capability differences. He also questioned the feasibility of the 60-day import timeline without clear transportation methods, suggesting it could raise false hopes during the high oil price crisis.
