Business

Helmsman: Practical tips for bunkering, commodities sectors on compliance with Russian sanctions

Maureen Poh, Director of Helmsman LLC, explains what recent sanctions on Russia mean for the shipping and commodities sectors and offers recommendations to help entities reduce exposure.

Published

3 years ago

March 1, 2022

Admin

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

Check your contracts: Is there a Russian element in the performance of the contract? Are there any clauses which you or your counterparty can rely on? This might help you reduce your exposure to sanctions and to get out of the contract. Conversely, it might enable the counterparty to not perform their obligations under the contract. This may have a knock-on effect on your obligations to third parties, so take note.
Check your counterparts: It is not sufficient to check that your counterparty is on the SDN List or subject to EU sanctions. Majority interests in the company, holding company, indirect ownership and control, are also relevant. I wrote about this in more detail in an earlier article.
Your financiers might be particularly sensitive to any dealings with Russia, even uncertain and tenuous ones. If in doubt, check with your banks as soon as possible.
Continue to closely monitor the sanctions situation. What works today might not work tomorrow.

Maureen Poh can be contacted at:

Phone: +65 6950 8667
E-mail: [email protected]

Photo credit: Helmsman LLC
Published: 1 March, 2022

Biofuel

Argus Media: Bunkering sector needs deeper dive into B24 bio bunker fuel market

‘As we advance into 2025, the need to understand how B24 matures in terms of market fundamentals, pricing and dynamics will be a key indicator for the marine sector,’ says Mahua Chakravarty of Argus.

Published

2 days ago

October 4, 2024

Admin

Argus Media organises free admission ‘Argus Asia B24 Forum’ for bunkering sector

Ahead of Argus Asia B24 Forum, Manifold Times interviewed Mahua Chakravarty, Head of Marine Fuels Pricing (Asia) of independent global energy and commodity market intelligence provider Argus Media; she explains the growing prominence of B24 bunker fuel in the marine sector and believes it is imperative for the bunkering sector to deepen its knowledge on it:

MT: Why is it important for the bunkering sector to know more about the B24 bunker fuel market?

B24 has emerged as the first alternative marine fuel that allows ship-owners and charterers a drop-in fuel option, and make greenhouse gas (GHG) savings, for their voyages into EU and territorial waters.

It has proved to be the most practical solution for ship-owners that eliminates costly retrofitting charges. The easy availability of used cooking oil methyl ester (UCOME) as a blendstock from China and southeast Asia, also adds to its overall attractiveness as an alternative fuel.

B24 consumption in the port of Singapore recorded multi-fold jumps to touch 518,000t in 2023 as ship-owners fuelled for trials in preparation for the implementation of EU-led mandates like the EU Emissions Trading Scheme (ETS) and the Carbon Intensity Index (CII) rating. In 2024, B24 demand has continued to grow with 377,800t of consumption seen up to August, according to statistics from the Maritime and Port Authority of Singapore (MPA).

As we advance into 2025, the need to understand how B24 matures in terms of market fundamentals, pricing and dynamics will be a key indicator for the marine sector. Being the first generation of new marine fuels, B24 has shown the way that biofuel blends can provide a solution for ship-owners/charterers to meet compliance mandates set by the EU and IMO.

MT: Why has Argus developed its own B24 Singapore price index? What's so special about it and why should the industry adopt it as a benchmark?

Argus was the first to launch its spot B24 delivered on board (DOB) Singapore assessment in January 2023, thus introducing price discovery for this market at its point of inception. The past 1.5 years of daily price assessments of B24, using a robust market survey approach, has built Argus’ understanding of this market from the start.

We have seen the growth of liquidity and the quest among refiners, traders, ship-owners to find pricing solutions for a nascent market. We have been at the forefront of capturing spot liquidity growth and in assessing prices for this market.

This index is now considered a key price assessment by key refiners, traders, ship-owners and other stakeholders in the market.

MT: What takeaways can each segment of the bunkering sector such as bunker buyers, bunker traders, and shipowners receive from the upcoming Argus B24 forum?

The Argus B24 Asia Forum is aimed at showcasing some of these learnings by a global team that covers key markets like Singapore, China and Europe. Our global team will present their insights on the key trends driving demand for marine biodiesel globally.

As the marine sector marches onwards with the bunkering of higher biofuel blends, this forum will allow the audience to reflect on the key factors that have driven the marine biodiesel sector. It will provide insights to make better decisions about infrastructure, pricing, feedstock-related issues and what blends are likely to be prevalent in the coming year.

We will be hosting a panel discussion at this forum that will include key players driving the marine biodiesel space in Singapore and other regions.

The Argus Asia B24 Forum will be held in The Village Hotel (The Events Centre by Far East Hospitality), Sentosa, Singapore (Google Maps) on 8 October between 4.00pm to 7.00pm Singapore Time.

Participants are encouraged to register for the free event via the custom link here.

Photo credit: Argus Media
Published: 4 October 2024

Bunker Fuel

Brazil: Raízen launches new bunkering operation in Itaqui

Operation will support both coastal and oceangoing vessels at Off Port Limits, allowing the firm’s customers to avoid full port call fees and unnecessary deviations, says Paula Georgopoulos Tinoco.

Published

2 days ago

October 4, 2024

Admin

Brazil: Raízen launches new bunkering operation in Itaqui

Brazilian energy firm Raízen has launched its new bunkering operation in Itaqui at the Outer Anchorage Area, according to Paula Georgopoulos Tinoco, Bunker Sales Coordinator at Raízen on Wednesday (3 October).

The firm is providing local supplies for the grades VLSFO380 (max. 0.5%S) and LSMGO DMA (max. 0.1%S).

“The new bunkering operation will support both coastal and oceangoing vessels with different sizes and class at the Off Port Limits, allowing our customers to avoid full port call fees and unnecessary deviations at different bunkering ports,” she said in a social media post.

In September last year, Bunker Holding subsidiary Bunker One announced that it partnered with Acelen, the largest bunker producer in the Brazilian state of Bahia, to offer the only outer anchorage bunkering operation in Brazil at the time.

Starting September 2023, vessels such as large cargo ships and tankers can be supplied in the anchorage area of the Port of Itaqui in São Marcos Bay (MA).

Photo credit: Raízen
Published: 4 October, 2024

Business

Rahim Oberholtzer named as new Infineum Chief Financial and Strategy Officer

Oberholtzer, a finance executive with over 25 years of experience, joins Infineum from Shell, where he has held various senior positions including Senior Vice President of Shell Finance for Chemicals and Products.

Published

2 days ago

October 4, 2024

Admin

Rahim Oberholtzer named as new Infineum Chief Financial and Strategy Officer

International fuel additives company Infineum on Thursday (3 October) announced the appointment of Mr. Rahim Oberholtzer as the new Chief Financial and Strategy Officer, effective 1 October.

Oberholtzer will succeed Mr. Philippe Creteur, who has retired at the end of September 2024, after 18 years of dedicated service to Infineum.

Oberholtzer, a seasoned finance executive with over 25 years of diverse experience, joins Infineum from Shell, where he has held various senior positions. His most recent role was Senior Vice President of Shell Finance for Chemicals and Products.

During his career, Oberholtzer has acquired extensive expertise in public accounting, investment banking, and trading. He began his professional journey at KPMG in San Francisco as an auditor. He then moved on to Merrill Lynch, focusing on mergers and acquisitions and equity offerings within the energy sector, ultimately serving as Head of Structured Finance at Merrill Lynch Commodities.

In 2011, he joined Shell’s Mergers and Acquisitions team in the U.S., leading key projects such as the launch of Shell Midstream Partners and the Eagle Ford divestment. He subsequently managed finance teams in Trading & Supply, covering European Gas & Power, Global Crude, and Global Products & Operations.

Infineum CEO Aldo Govi, said: “We are deeply grateful for Philippe’s years of dedication and excellent contribution to Infineum. At the same time, I am thrilled to welcome Rahim to our corporate leadership team.”

Photo credit: Infineum
Published: 4 October, 2024