Indian Oil Giant ONGC Finding It Difficult To Shift Russian Oil To Asia Due To Sanctions: Reports
According to reports quoting information from sources, India’s Oil and Natural Gas Corp (ONGC) is finding it hard to secure a vessel to export 700,000 barrels of petroleum from Russia’s the Far East, indicating that Western sanctions are disrupting complex trades involving one of Moscow’s most important allies.
Several Indian businesses, notably ONGC, own Russian oil and gas holdings, and India has been buying more Russian crude since Moscow invaded Ukraine, picking up the popular Urals crude grade while other consumers have avoided Russian supplies.
ONGC owns a 20% share in the Sakhalin 1 project, which produces a Russian grade known as Sokol, which it exports via tenders. Sokol is primarily purchased by North Asian buyers and loaded in South Korea.
However, Moscow’s capacity to ship that grade, which necessitates vessels capable of breaking through ice, is becoming more difficult due to shippers’ concerns about reputational risk and the increasing difficulties for Russian assets to acquire insurance coverage.
Cargoes of Sokol oil are typically carried from the De-Kastri facility in Russia’s the Far East to South Korea, where they are reloaded onto a regular tanker.
Because of the difficulty of transportation, Indian refiners rarely purchase Sokol grade crude. The global merchant fleet has a limited number of ice-class vessels that can be deployed at any moment.
ONGC relies on ice-class tankers provided by Russia’s state-owned Sovcomflot (SCF) to deliver crude to the South Korean port of Yoesu, from which the Indian business exports to clients primarily in North Asia.
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, are making it difficult for Russian ships, including SCF’s fleet, to maintain insurance and reinsurance cover for voyages, according to shipping sources.
According to the shipping sources, shipping companies are less eager to transfer Russian oil to Asia since they are concerned about the potential reputational implications of charters.
Last month, ONGC received no offers in its tender for Sokol export because purchasers withdrew owing to Western sanctions.
As a result, ONGC sold one cargo to each Indian state refineries, Hindustan Petroleum Corp and Bharat Petroleum Corp. (BPCL).
According to shipping sources, BPCL’s cargo was slated to be lifted early next month from South Korea’s Yeosu port, while HPCL was granted the cargo for lifting in late May.
According to shipping reports, BPCL inquired about chartering a vessel from the South Korean port and attempted to reserve the MV Atlantis for early May exports.
The arrangement, however, failed since ONGC was unable to arrange a vessel to Yeosu port, mainly due to challenges with obtaining insurance for the voyage, according to sources.
There were no comments on the issue from ONGC, HPCL, and BPCL.
This year, India has purchased more crude from Russia in the two months since it invaded Ukraine than it did in 2021.
Russia’s marine sector is dealing with discontinuing services such as ship certification by leading overseas providers such as the United Kingdom’s LR and Norway’s DNV.
According to Reuters, marine gasoline suppliers have stopped fueling vessels carrying the Russian flag at major European hubs such as Spain and Malta, dealing an additional blow to Moscow’s exports.
IN MARCH, the EU identified SCF as one of the Russian state-owned enterprises with whom it was “prohibited to directly or indirectly participate in any transaction” once a wind-down period expires on May 15.