India scrambles to find ship to ship crude oil from Russia | Business and Business News

India’s 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 of complex trade deals involving one of Moscow’s biggest partners , interrupted by Western sanctions, Reuters reported. cite sources.

Several Indian companies, including ONGC, have interests in Russian oil and gas assets, and India has bought more Russian crude since Moscow invaded Ukraine, snapping up the popular Ural grade of crude, while other buyers have shunned Russian exports.

ONGC has a 20 percent interest in the Sakhalin 1 project, which produces a Russian variety called Sokol that ONGC exports through tenders. Sokol is mainly bought by North Asian buyers and loaded from South Korea.

But Moscow’s ability to ship this quality, which requires ships capable of breaking ice, is becoming increasingly difficult due to shippers’ concerns about reputational risk and the increasing difficulty for Russian assets to find insurance cover.

Normally, shipments of Sokol oil are first shipped from the De Kastri terminal in Russia’s Far East to South Korea by ice-class vessels, where they are then transferred to a conventional tanker.

Indian refiners rarely buy Sokol grade due to difficult logistics making the crude oil expensive. There is a limited number of Ice Class ships in the Global Merchant Fleet that can be deployed at any time.

ONGC relies on ice-class vessels provided by Russia’s state-owned Sovcomflot (SCF) to transport crude oil to Yeosu Port in South Korea, from where the Indian company exports to buyers, mainly in North Asia.

Sanctions build barriers

However, sanctions imposed on Russia by the United States, Britain, the European Union and Canada following Moscow’s invasion of Ukraine, as well as specific restrictions on SCF, make it difficult for Russian vessels, including SCF’s fleet, to maintain insurance and reinsurance coverage for voyages, said shipping sources.

Shipping companies are also less willing to ship Russian oil in Asia, fearing the potential reputational risks associated with charters, the shipping sources added.

Last month, ONGC received no bids in its tender to export Sokol as buyers backed down due to Western sanctions.

This led to ONGC selling one shipment each to Indian state refiner Hindustan Petroleum Corporation and Bharat Petroleum Corporation (BPCL).

BPCL’s cargo was due to be lifted from Yeosu Port in South Korea early next month, while HPCL was awarded the lift in late May, shipping sources said.

BPCL had made a request to charter a ship from the South Korean port and is attempting to book the ship Atlantis for shipments in early May, shipping reports show.

However, the appointment fell through as ONGC was unable to arrange a ship to Yeosu Port, partly due to issues with securing travel insurance, sources said.

ONGC, HPCL and BPCL did not respond to Reuters emails seeking comment.

This year, India has bought more than twice as much crude oil from Russia in the two months since its invasion of Ukraine as it did in all of 2021.

The Russian shipping sector is struggling with the cessation of services, including ship certification, by leading foreign providers such as Britain’s LR and Norway’s DNV.

Marine fuel sellers have stopped servicing Russian-flagged ships at key European hubs including Spain and Malta, in another blow to Moscow’s exports, sources with knowledge of the matter told Reuters.

The EU in March listed SCF among Russian state-owned companies with which it was “banned from transacting, directly or indirectly,” after a May 15 wind-up deadline.

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