HOUSTON/NEW DELHI, Oct 17 (Reuters) – Oil output on the large Exxon-led (XOM.N) Sakhalin-1 Russian Pacific venture collapsed following the U.S. main’s refusal to just accept local insurance for tankers after Western insurers pulled out resulting from sanctions, a number of trade sources instructed Reuters.
Western insurers withdrew cowl from tankers operated by state-run Sovcomflot (FLOT.MM), Russia’s largest delivery group, which was sanctioned following Moscow’s invasion of Ukraine.
“Exxon has refused to take Sovcomflot’s tankers,” one trade supply mentioned. Some cargoes meant for provides to Indian refiners have been additionally hit as Exxon didn’t recognise the choice cowl Sovcomflot had organized from Russian insurers, based on the sources.
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Sovcomflot and Exxon didn’t instantly reply to requests for remark.
The developments have unfolded because the European Union is because of impose a ban on Russian oil tanker insurance and exhibits the main influence ship insurance and re-insurance ensures can have on operations.
Russia’s state oil champion Rosneft (ROSN.MM), a associate within the Sakhalin-1 venture, has blamed Exxon for falling output, saying that since mid-May the venture produced hardly any oil.
Exxon’s Russian unit, Exxon Neftegas Ltd, has cited problem chartering tankers resulting from sanctions.
Russian newspaper Kommersant was first to report on Monday that manufacturing at Sakhalin-1 collapsed following Exxon’s refusal to work with Sovcomflot.
Oil output on the Sakhalin-1 venture fell to simply 10,000 barrels per day (bpd) earlier this yr from 220,000 bpd earlier than Russia invaded Ukraine on Feb. 24.
Russian President Vladimir Putin signed a decree earlier this month establishing a brand new operator for Sakhalin-1 that might be managed by Rosneft subsidiary Sakhalinmorneftegaz-Shelf.
The determination offers the Russian authorities authority to resolve whether or not overseas shareholders can retain stakes within the venture, giving them one month to specific curiosity or else dropping their stakes.
Rosneft holds a 20% stake in Sakhalin-1, ONGC Videsh (ONVI.NS), the abroad funding arm of India’s state-run ONGC, has a 20% stake within the venture, and Japan’s state-backed oil producer SODECO the remaining 30%.
In August, Exxon mentioned it was within the strategy of transferring its 30% stake within the oil and gasoline venture “to another party”, with out naming it.
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Reporting by Nidhi Verma and Sabrina Valle; Editing by Alex Richardson
Our Standards: The Thomson Reuters Trust Principles.
