India’s Oil and Natural Gas Corp (ONGC) is struggling to find a vessel to ship 700,000 barrels of crude from Russia’s Far East, in a growing sign that complex trades involving one of Moscow’s biggest partners are being interrupted by Western sanctions, sources say.
Several Indian companies including ONGC (ONGC.NS) have stakes in Russian oil and gas assets, and India has been buying more Russian crude since Moscow invaded Ukraine, snapping up the popular Urals crude grade, while other buyers have shunned Russian exports.
ONGC has a 20% stake in the Sakhalin 1 project that produces a Russian grade known as Sokol, which ONGC exports through tenders..
However, Moscow’s ability to ship that grade, which requires vessels that can break through ice, is becoming harder due to concerns from shippers over reputational risk and the increasing difficulty for Russian assets to find insurance coverage.
Indian refiners rarely buy the Sokol grade, as difficult logistics make the crude costly.
ONGC relies on ice-class vessels provided by Russia’s state-owned Sovcomflot (SCF) for the transportation of crude to Yoesu port in South Korea, and from there the Indian company exports 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 restrictions on SCF, are making it harder for Russian ships including SCF’s fleet to maintain insurance and reinsurance cover for voyages, shipping sources said.
Shipping companies are also less willing to move Russian oil in Asia, fearing the potential reputational risks involved with charters, the shipping sources added.
Last month, ONGC did not receive any bids in its tender for export of Sokol as buyers backed out due to Western sanctions.