The Indian oil and gas major, Oil and Natural Gas Corp (ONGC) is struggling to secure a vessel to export 70,000 barrels of crude oil from Russia’s Far East due to Western sanctions placed on Moscow. ONGC, along with numerous other Indian firms, owns oil and gas holdings in Russia. While many nations have avoided Russian exports as a result of the Ukraine-Russia conflict, India has increased its purchases of Russian oil. According to the source, ONGC owns a 20% share in the Sakhalin 1 plant, which produces Sokol, a Russian grade that the Indian business exports through tenders. Buyers from the north Asian region mostly buy Sokol and it is loaded from South Korean ports.
However, shipping that grade is becoming harder because of concerns from shippers over reputational risk and increasing difficulty for Russian assets to find insurance coverage.
Usually, Sokol oil are first shipped from the De-Kastri terminal in Russia’s Far East using ice class vessels to South Korea. From there, they are reloaded onto conventional tankers. In the global merchant fleet, the number of ice class vessels are also limited that can be deployed at any time.
Refiners from India rarely buy the Sokol grade due to its difficult logistics which make the oil costly.
For transporting Sokol grade oil, ONGC mostly relies on ice-class vessels provided by Russia’s state-owned Sovcomflot (SCF). These vessels ferry the crude to Yoesu port in South Korea, and from there the Indian firm exports to buyers, mostly in the north Asia countries.
Shipping sources have said that harsh sanctions on Russia by the US and other Western European countries are making it difficult for Russian vessels to maintain insurance and reinsurance cover for voyages. Sanctions were also imposed on SCF’s fleet by the West.
Fearing potential reputational risks, shipping companies are also less willing to move Russian oil in Asia, sources added.
ONGC did not receive any bids in its tender for export of Sokol last month as buyers backed out due to sanctions.
Later ONGC sold one cargo each to Hindustan Petroleum Corp and Bharat Petroleum Corp.
According to shipping sources, BPCL’s cargo was scheduled for lifting early next month from Yeosu port in South Korea, while HPCL was awarded the cargo for lifting in end-May. India this year has bought more than twice as much Russian crude in the two months since Ukraine-Russia war as it did in all of 2021.
