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ONGC Faces Difficulty Finding Ships to Obtain Russian Oil: Report -By ASC


The ONGC is struggling to move Russian oil to Asia because of biting restrictions, sources said: Report

DELHI/NEW LONDON:

The Oil and Natural Gas Corporation of India (ONGC) is struggling to find ships to ship 700,000 barrels of crude oil from Russia’s Far East, as a growing sign that complex trade involving one of Moscow’s biggest partners is being disrupted by Western sanctions, sources said.

Several Indian companies including ONGC have interests in Russian oil and gas assets, and India has bought more Russian crude since Moscow invaded Ukraine, taking on popular Ural crude oil grades, while other buyers have 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 a tender. Sokol is mostly bought by North Asian buyers and shipped from South Korea.

However, Moscow’s ability to ship the grade, which requires ships that can penetrate ice, is increasingly difficult due to concerns from shippers over reputational risks and the growing difficulty for Russian assets to seek insurance coverage.

Typically, Sokol oil cargo is first shipped from the De-Kastri terminal in Russia’s Far East using ice-class vessels to South Korea, where it is then reloaded onto conventional tankers.

Indian refiners rarely buy Sokol grades, as difficult logistics make the crude expensive. There are a limited number of ice class ships in the global merchant fleet that can be used at any time.

ONGC relies on ice -class vessels provided by Russian state -owned Sovcomflot (SCF) to transport crude oil to the port of Yoesu in South Korea, and from there Indian companies export to buyers, mostly in North Asia.

However, sanctions imposed on Russia by the United States, Britain, the European Union and Canada after Moscow’s invasion of Ukraine, in addition to specific sanctions on the SCF, made it difficult for Russian ships including the SCF fleet to maintain insurance and reinsurance coverage for navigation. . , said a shipping source.

Shipping companies are also less prepared to move Russian oil in Asia, worried about the potential reputational risks involved with the lease, the shipping source added.

Last month, ONGC did not accept any bids in its tender for Sokol exports as buyers withdrew due to Western restrictions.

This resulted in the ONGC selling one cargo each to Indian state referees Hindustan Petroleum Corp and Bharat Petroleum Corp (BPCL).

BPCL cargo is scheduled to be lifted early next month from the port of Yeosu in South Korea, while HPCL is awarded cargo to lift at the end of May, according to shipping sources.

BPCL has launched an investigation to charter ships from South Korean ports and is working to book Atlantis ships for delivery in early May, shipping reports show.

The fixture failed, however, as the ONGC was unable to arrange ships to Yeosu port partly due to problems with obtaining insurance for the voyage, sources said.

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

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

Russia’s maritime sector is struggling with the winding up of services including vessel certification by leading foreign suppliers such as LR Britain and DNV Norway.

Marine fuel sellers have halted the service of ships flying Russian flags in major European hubs including Spain and Malta in another blow to Moscow exports, a source familiar with the matter told Reuters.

The EU in March listed SCF among Russian state -owned companies for which it is “prohibited from engaging directly or indirectly in any transaction” after the break period ended on May 15.

(Except for the headline, this story has not been edited by AGRASMARTCITY staff and is published from a syndicated feed.)

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