With the European Union set to enact a price cap for Russian oil exports via maritime transport, Russia’s biggest oil exporter, Rosneft, has expanded its tanker chartering business to ease oil shipments for buyers Reuters reports.
Rosneft, which produces more than 40% of Russian oil, sells its oil at the port of loading, meaning the buyer has to hire tankers and handle freight and insurance costs. However, with Western sanctions looming, Rosneft’s customers are asking the company to handle delivery to the final destination meaning the company will now assume freight and insurance costs.
Many of Rosneft’s customers lack trading businesses that can handle operations such as shipping.
Rosneft has increased exports to Asia, Africa and South America following the imposition of Western sanctions for invading Ukraine. Russia’s seaborne Urals crude exports to Asia have jumped six times for the first nine months of the year this year compared with the same period of 2021 with India becoming one of its biggest customers.
Russian oil giants are definitely feeling the effects of tighter Western sanctions.
A month ago, Germany assumed control of Russian Rosneft refining assets in the country in a bid at securing energy independence just over three months before an EU ban on Russian oil goes into effect. Previously, Germany took over a Gazprom subsidiary earlier this year.
Now, with Russia’s oil refinery assets in Germany out of Moscow’s hands, a final question lingers: Where will Germany get non-Russian oil to run key refineries?
Last month, Germany moved to seize the local unit of Russian oil major Rosneft PJSC, including three oil refineries as Berlin goes for a radical overhaul of its economy, hoping to control its industrial base and prevent shortages and blackouts this winter.
“Over the next few months, we’ll have to continue to preserve critical infrastructure in order to achieve energy independence,” Verena Hubertz, a leading lawmaker for Scholz’s Social Democrats, has told Bloomberg.
Rosneft has protested against the seizure calling it illegal and saying it amounts to an expropriation of equity assets in which it had invested €4.6bn in refining capacity. In a company statement, the Russian oil giant says it will “consider all possible measures to protect its shareholders, including legal action”.
By Alex Kimani for Oilprice.com
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