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Russian Prime Minister Mikhail Mishustin has signed an agreement demanding that all Russian oil companies comply with a previous order that disallows any exports of Russian crude oil or crude oil products to any buyer that adheres to the price cap mechanism.
It should be noted that Russian companies failing to comply will face no penalties, according to Upstream.
Mishustin’s resolution, signed this week, bans Russian oil producers from signing sales contracts with any buyer engaged in the price cap clause imposed by the G7. The resolution calls on producers to submit a declaration to Russian customs for each cargo sold, attesting to the fact that the price-cap mechanism hasn’t been used. Russian customs, then, will review old and new crude oil export contracts—and customs reserves the right to stop any cargo that violates Putin’s decree.
Even more convoluted, the decree requires all Russian crude producers to track the progression of the seaborne cargoes from the point of origin to its final destination, which means they will have to obtain and review contracts from third parties every time the crude changes hands along the journey, to make sure the price cap clause isn’t included.
If a producer discovers that the price cap clause is included in some paper after the crude oil has left the point of origin, it has 30 days to remedy the violation, with five additional days granted to notify customs if they were unable to fix it. Again, there are no stated penalties for failing to comply.
Last month, Russia shipped crude oil to India under the price cap mechanism in what was the first sign that the oil-producing giant could acquiesce to the Western criteria.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.