New Delhi/London: Oil and Natural Gas Corporation (ONGC) is struggling to find a ship to ship 700,000 barrels of crude oil from Russia’s Far East, in a growing sign that complex trade involving one of Moscow’s biggest partners is being disrupted by Western sanctions , say the sources.
Several Indian companies including ONGC have stake Russian oil and gas assets, and since Moscow invaded Ukraine, India has been buying more Russian crude, breaking the popular Ural crude grade, while other buyers have abandoned Russian exports.
ONGC holds a 20% stake in the Sakhalin 1 project which produces a Russian grade known as Sokol, which ONGC exports through tenders. Sokol is mostly bought by North Asian buyers and loaded from South Korea.
However, Moscow’s ability to ship that grade, which requires vessels that can break through ice, is becoming increasingly difficult due to shippers’ concerns over reputational risk and the increasing difficulty of finding insurance coverage for Russian assets. Is.
Typically, cargoes of Sokol oil are first shipped from the D-Kastry terminal in Russia’s Far East to South Korea using ice class vessels, where they are reloaded on a conventional tanker.
Indian refiners rarely buy Sokol grades, as difficult logistics make crude costlier. The global merchant fleet has a limited number of ice class ships that can be deployed at any given time.
ONGC relies on ice-class vessels provided by Russia’s state-owned Sovcomflot (SCF) to transport crude to Yosu port in South Korea, and from there the Indian company exports to buyers, mostly northern in Asia.
However, sanctions imposed on Russia by the United States, Britain, the European Union and Canada following Moscow’s invasion of Ukraine, in addition to specific restrictions on the SCF, maintained insurance and reinsurance cover for voyage Russian ships including the SCF’s fleet. making it difficult. , shipping sources said.
Shipping companies are also less willing to move Russian oil to Asia for fear of potential reputational risks associated with charters, shipping sources said.
Last month, ONGC did not receive any bids in its tender for exports to Sokol as buyers withdrew due to western sanctions.
This led ONGC to sell one cargo each to Indian state refiners Hindustan Petroleum Corporation and Bharat Petroleum Corporation
According to shipping sources, BPCL’s cargo was scheduled to lift off from Yeosu port in South Korea early next month, while HPCL was awarded to lift the cargo at the end of May.
BPCL had launched an investigation into the hiring of a vessel from a South Korean port and sought to book the ship Atlantis for shipment in early May, shipping reports show.
Sources said the fixture failed, however, as ONGC could not arrange a vessel to Yeosu port partly due to issues in securing insurance for the voyage.
ONGC, HPCL and BPCL did not respond to emails from Reuters seeking comment.
This year, India has more than doubled crude oil purchases from Russia in the two months since its invasion of Ukraine, as it did throughout 2021.
Russia’s maritime sector is grappling with the termination of services, including ship certification, by major foreign providers such as Britain’s LR and Norway’s DNV.
Sources with knowledge of the matter told Reuters that marine fuel vendors have stopped serving Russian flag-flying vessels to major European hubs, including Spain and Malta.
The European Union in March listed SCF among Russian state-owned companies with which it was “prohibited to engage in any transaction directly or indirectly” after the expiry of the period on 15 May.
Several Indian companies including ONGC have stake Russian oil and gas assets, and since Moscow invaded Ukraine, India has been buying more Russian crude, breaking the popular Ural crude grade, while other buyers have abandoned Russian exports.
ONGC holds a 20% stake in the Sakhalin 1 project which produces a Russian grade known as Sokol, which ONGC exports through tenders. Sokol is mostly bought by North Asian buyers and loaded from South Korea.
However, Moscow’s ability to ship that grade, which requires vessels that can break through ice, is becoming increasingly difficult due to shippers’ concerns over reputational risk and the increasing difficulty of finding insurance coverage for Russian assets. Is.
Typically, cargoes of Sokol oil are first shipped from the D-Kastry terminal in Russia’s Far East to South Korea using ice class vessels, where they are reloaded on a conventional tanker.
Indian refiners rarely buy Sokol grades, as difficult logistics make crude costlier. The global merchant fleet has a limited number of ice class ships that can be deployed at any given time.
ONGC relies on ice-class vessels provided by Russia’s state-owned Sovcomflot (SCF) to transport crude to Yosu port in South Korea, and from there the Indian company exports to buyers, mostly northern in Asia.
However, sanctions imposed on Russia by the United States, Britain, the European Union and Canada following Moscow’s invasion of Ukraine, in addition to specific restrictions on the SCF, maintained insurance and reinsurance cover for voyage Russian ships including the SCF’s fleet. making it difficult. , shipping sources said.
Shipping companies are also less willing to move Russian oil to Asia for fear of potential reputational risks associated with charters, shipping sources said.
Last month, ONGC did not receive any bids in its tender for exports to Sokol as buyers withdrew due to western sanctions.
This led ONGC to sell one cargo each to Indian state refiners Hindustan Petroleum Corporation and Bharat Petroleum Corporation
According to shipping sources, BPCL’s cargo was scheduled to lift off from Yeosu port in South Korea early next month, while HPCL was awarded to lift the cargo at the end of May.
BPCL had launched an investigation into the hiring of a vessel from a South Korean port and sought to book the ship Atlantis for shipment in early May, shipping reports show.
Sources said the fixture failed, however, as ONGC could not arrange a vessel to Yeosu port partly due to issues in securing insurance for the voyage.
ONGC, HPCL and BPCL did not respond to emails from Reuters seeking comment.
This year, India has more than doubled crude oil purchases from Russia in the two months since its invasion of Ukraine, as it did throughout 2021.
Russia’s maritime sector is grappling with the termination of services, including ship certification, by major foreign providers such as Britain’s LR and Norway’s DNV.
Sources with knowledge of the matter told Reuters that marine fuel vendors have stopped serving Russian flag-flying vessels to major European hubs, including Spain and Malta.
The European Union in March listed SCF among Russian state-owned companies with which it was “prohibited to engage in any transaction directly or indirectly” after the expiry of the period on 15 May.