The following article explaining what recent sanctions on Russia mean for the shipping and commodities sectors has been written by Maureen Poh, FCIArb, a Director at Helmsman LLC. Poh has significant experience with energy-related shipping and commodity-related matters, as a Singapore and English qualified lawyer. She is hailed in Chambers 2022 as a well-regarded lawyer in the market; Legal 500 lauds her commodities trading work in both contentious and advisory aspects and describes her as “a key name for charterparty disputes, carriage of goods by sea and cargo claims”:
The US, EU and their allies have imposed sanctions against Russia in the current Ukraine crisis. The list of sanctions grows longer by the day. What does this mean for shipping, in particular the bunkering and commodities sectors? The Russia sanctions landscape is changing rapidly. You need to keep a close eye on it.
Sanctions snapshot
So far there appears to be no blanket prohibition on trading oil or commodities with Russian entities. What is in place are restrictions relating to foreign financing and new equity issued by thirteen Russian state-owned enterprises and entities including Sovcomflot, oil producer and refiner Gazprom Neft and natural gas company Gazprom, amongst others. Rosneft has been on the US Sectoral Sanctions Identifications List (SSI List) for some time now.
Of particular significance are sanctions relating to the financial sector. The US, and to a lesser extent the EU and UK, have imposed a variety of sanctions against identified banks, such as blocking their ability to do business and freezing their assets blocking sanctions. Interestingly, the US has in place a waiver for “energy-related” transactions with some of the sanctioned Russian banks until June 2022. “Energy related” is defined broadly: included are extraction, production and refining of any petroleum products as well as other commodities capable of producing energy, such as coal, wood, agricultural products for biofuels, uranium, and electricity. This is perhaps an acknowledgement of Russia’s importance to the global supply of energy commodities.
Separately, and more importantly to foreign parties dealing with Russian counterparts, is the cutting off of a number of Russian banks from the main international payment system, SWIFT. The banks are yet to be identified. SWIFT does not actually move money – it is a secure platform for banks, acting as a middleman to verify information on transactions by providing secure financial messages services between banks. It is very extensively used as a way to facilitate payment, particularly by way of telegraphic transfer or letter of credit.
An increasing number of Russian individuals have also been placed on the US Specially Designated Nationals and Blocked Persons List (SDN List) or under EU sanctions regulations.
What does this mean for you?
While there are currently no sanctions by governments or international organisations over Russian energy commodities, it is likely that the private sector will be very cautious in dealing with cargoes linked to Russia or engaging with Russian entities, as there is always the risk of further sanctions being imposed. The risks of doing business with Russia may become too much for many companies to take on, even without sanctions.
For instance, bunker purchasers might want suppliers to warrant that bunkers supplied contain no Russian-origin material.
Payment might be a big issue. Companies will have to find alternative ways for payment, for instance over the telephone or fax. This will obviously have to be coordinated with the banks.
Business dealings with Russian entities will also be scrutinised. Recently, France seized a ship that is allegedly linked to an individual on the SDN List.
What should you do? Practical tips
Maureen Poh can be contacted at:
Phone: +65 6950 8667
E-mail: maureen.poh@helmsmanlaw.com
Photo credit: Helmsman LLC
Published: 1 March, 2022
Facility operated by Qingdao Shihua Crude Oil Terminal Co., Ltd. is the first designated futures delivery warehouse for LSFO in northern China.
Move an example of company’s internal mobility program, says Offshore Manager of the Singapore office.
Majority of VLSFO components come from low cost distillate and low sulphur petrochemical streams which can be readily separated to form distillate sludge.
‘Maybe there is an opportunity to deploy the second LNG bunker tanker in Singapore,” Timothy Cosulich, CEO and Board Member of Fratelli Cosulich, tells Singapore bunkering publication Manifold Times.
There were 2.7million barrels of bonded marine fuel sales in Japan during August, down 0.6% from July but up 8.2% from a year earlier, show METI data.
The backwardation materialised amid signs of slowing arbitrage arrivals and a slowdown in regional production of low-sulphur residuals, reports Argus Media.
Cash of SGD 4.43 million and USD 243,100, and one piece of 100-gram gold-coloured bar recovered in safe belonging to Abdul Latif Bin Ibrahim kept at Extra Space warehouse storage facility, show court documents.
Program introduces periodic assessments, mass flow metering data analysis, and regular training for relevant key personnel to better handle the MFMS to ensure a high level of continuous operational competency.
U.S. Claims Register Summary recorded a total USD 833 million claim from a total 180 creditors against O.W. Bunker USA, according to the creditor list seen by Singapore bunkering publication Manifold Times.
Glencore purchased fuel through Straits Pinnacle which contracted supply from Unicious Energy. Contaminated HSFO was loaded at Khor Fakkan port and shipped to a FSU in Tanjong Pelepas, Malaysia to be further blended.
Individuals were employees of surveying companies engaged by Shell to inspect the volume of oil loaded onto the vessels which Shell supplied oil to; they allegedly accepted bribes totalling at least USD 213,000.
MPA preliminary investigations revealed that the affected marine fuel was supplied by Glencore Singapore Pte Ltd who later sold part of the same cargo to PetroChina International (Singapore) Pte Ltd.
