India struggles to find ship to ship crude from Russia | Business and Economics 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 that complex trade involving one of Moscow’s largest partners has been disrupted by Western sanctions, Reuters reported. Citing sources.

Several Indian companies, including ONGC, own stakes in Russian oil and gas assets, and India has been buying more Russian crude since Moscow invaded Ukraine, snatching away the famous Urals grade, while other buyers have shunned Russian exports.

ONGC has a 20 percent stake in the Sakhalin 1 project that produces a Russian variety known as Sokol, which the oil and natural gas company is bidding on. Sokol is mostly bought by buyers from North Asia and loaded from South Korea.

However, Moscow’s ability to ship that class, which requires ships that can break through the ice, has been made more difficult by shippers’ concerns about reputation risk and the increasing difficulty for Russian assets in finding insurance coverage.

Usually, shipments of Sokol oil are first shipped from the De Castries terminal in Russia’s Far East using ice-class vessels to South Korea, where they are then loaded onto a conventional tanker.

Indian refiners rarely buy Sokol grade, because difficult logistics makes crude oil expensive. There are a limited number of ice class vessels in the world’s merchant fleet that can be deployed at any time.

ONGC relies on ice-class vessels supplied by Russia’s state-owned Sovcomflot to transport crude oil to the port of Yeosu in South Korea, and from there the Indian company exports to buyers, mostly in North Asia.

Sanctions raise barriers

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

Shipping sources added that shipping companies are also less willing to transport Russian oil in Asia, fearing the potential reputational risks involved in the leases.

Last month, the Omani Oil and Natural Gas Company did not receive any bids in its tender to export Sokol as buyers backed down due to Western sanctions.

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

The BPCL cargo was scheduled to be lifted early next month from the South Korean port of Yeosu, while HPCL was given the cargo to lift at the end of May, according to shipping sources.

Shipping reports showed that BPCL launched a vessel charter investigation from a South Korean port and sought to reserve the Atlantis for shipment in early May.

But the sources said the supplies failed because the oil and natural gas company could not arrange a ship to the Yeosu port due to issues with securing the voyage.

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

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

The Russian maritime sector is having difficulty ending services including the approval of ships by major foreign suppliers such as British LR and Norway’s DNV.

Informed sources told Reuters that sellers of marine fuel have stopped servicing Russian-flagged ships in major European hubs including Spain and Malta, in another blow to Moscow’s exports.

The European Union included SCF in March among the Russian state-owned companies with which it is “prohibited, directly or indirectly, to enter into any transaction” after the liquidation period expired on May 15.