India struggles to find vessel to ship crude from Russia | Business and Economy News

India’s Oil and Natural Gas Corporation (ONGC) is struggling to find a vessel to ship 700,000 barrels of crude from Russia’s Far East, a growing sign that the complex trade dealings involving one of the largest Moscow’s partners are being cut off by Western sanctions, Reuters reported, citing sources.

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

ONGC has a 20% stake in the Sakhalin 1 project which produces a Russian grade known as Sokol, which ONGC exports through tenders. Sokol is mainly purchased by North Asian buyers and loaded from South Korea.

However, Moscow’s ability to ship this grade, which requires ice-capable vessels, is becoming increasingly difficult due to shippers’ concerns about reputational risk and the increasing difficulty for Russian assets to find a insurance cover.

Normally, Sokol oil cargoes are first shipped from the De-Kastri terminal in the Russian Far East using ice-class vessels to South Korea, where they are then reloaded onto a conventional tanker.

Indian refiners rarely buy the Sokol grade, as difficult logistics make the crude expensive. There are a limited number of ice-class ships in the World Merchant Fleet that can be deployed at any time.

ONGC relies on ice-class vessels supplied by the Russian state-owned company Sovcomflot (SCF) to transport crude to the port of Yeosu in South Korea, and from there the Indian company exports to buyers, mainly in North Asia.

Sanctions set up barriers

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

Shipping lines are also less willing to ship Russian oil to Asia, fearing potential reputational risks from chartering, the shipping sources added.

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

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

BPCL’s cargo was due to be lifted early next month from Yeosu Port in South Korea, while HPCL received the cargo for lifting in late May, according to shipping sources.

BPCL had launched an investigation to charter a vessel from the South Korean port and sought to book the Atlantis vessel for shipments in early May, according to shipping reports.

The assembly fell through, however, as ONGC was unable to arrange a vessel for Yeosu Port partly due to insurance issues for the trip, sources said.

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

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

Russia’s maritime sector is grappling with the gradual reduction of services, including ship certification by major foreign providers such as Britain’s LR and Norway’s DNV.

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

In March, the EU listed SCF among Russian state-owned companies with which it was “prohibited from directly or indirectly engaging in any transaction” after a liquidation period ended on May 15.