* Shandong teapot refiners buy Urals to replace expensive
* Narrow Brent-Dubai price spread opens arbitrage
By Olga Yagova and Florence Tan
MOSCOW/SINGAPORE, Feb 14 Russian crude imports
to China have risen in early 2017 as the country's independent,
or teapot, refiners have expanded their diet to include the
Urals grade, trade sources said on Tuesday.
Russia could expand its market share in China, the
second-largest oil consumer, this year after a drop in Brent
prices relative to Middle East crude benchmark Dubai opened the
arbitrage for Russian Urals to head east. Russia topped Saudi
Arabia as the biggest crude seller to China in 2016.
Shandong Wonfull Petrochemical Group bought about 2 million
barrels of Urals crude for delivery in February and May, two
sources with knowledge of the matter told Reuters.
Of these, Mercuria will deliver 1.2 million barrels of Urals
this month from the supertanker Atromitos that is anchored off
Qingdao port, one of the sources said. The ship is also carrying
600,000 barrels of North Sea Forties, the source said.
"The (crude's) quality is good and is very similar to Oman,"
one of the sources said, adding that Urals also has better
Urals is priced against the Brent benchmark, which last
month narrowed to its lowest in more than a year against Dubai.
Teapots are replacing Middle East mainstay grade Oman with
Urals after it became more expensive after output cuts by the
Organization of the Petroleum Exporting Countries, traders said.
Another Shandong refiner Tianhong Chemical also received
Russian Urals onboard the supertanker New Pearl last month, one
of the sources said, citing Chinese port data.
"Urals has been a stranger for the Chinese market for ages,
it was clear such shipments didn't work for us, but suddenly we
see a possibility, worth trying," said a trader with a Chinese
More Urals are on the way to China. Lukoil's trading arm
Litasco is shipping 1 million barrels onboard the SKS Segura,
part of which it plans to sell to a teapot and store the rest,
said three trade sources with knowledge of the matter.
Unipec, the trading arm of Asia's largest refiner Sinopec,
and Litasco have chartered two more Suezmax tankers, the Odessa
and Euro, to load from Novorossiisk in mid-February, which are
expected to load to China, according to shipping data obtained
Wonfull, Mercuria and Litasco do not comment on their
trades. Tianhong could not be immediately reached for comment.
Unipec is an active buyer of Urals. It sent two supertankers
of Urals to China in October and November and is expected to
ship one more in February this year, said two traders familiar
with Unipec's operations.
(Reporting by Olga Yagova in Moscow and Florence Tan in