The Sakhalin-1 project faces difficulties in loading Sokol oil by tankers

According to Kommersant, problems with the shipment of November batches of Sokol oil from Sakhalin-1 have not yet been resolved. Now the uncertainty has spread to the delivery of December shipments. The reasons for the supply complications are unknown. Indian authorities denied difficulties with payments for supplies.

December tanker shipments of Sokol oil from Sakhalin-1 are encountering problems when delivered to customers. This is indicated by data from the ship tracking service, according to which loaded tankers with Sakhalin oil are idle awaiting further orders from the sellers. According to Kpler, the tanker Vostochny Prospect, loaded in December, has been stationary off Singapore since January 1. Another oil tanker, Jaguar, which was stationed in the South China Sea from January 1-8, has resumed its movement towards Singapore. Previously, on January 5, the ship indicated Indian Paradip as its destination. The tanker NS Lion was loaded off South Korea on January 1, and has remained off the coast of the Korean Peninsula since then. In turn, on January 8, the VLCC tanker La Balena, which has been transporting Venezuelan oil in recent years, was loaded off the South Korean Yeosu with the help of the Pavel Chernysh tanker. The tanker NS Antarctic, which transshipped on December 28, resumed movement in the East China Sea after being idle for several days.

Sokol oil cargoes traditionally were sent to India, but problems began in December. Several November oil shipments from Sakhalin-1 were never shipped after arriving on the shores of India. At first, six loaded tankers NS Commander, Liteyny Prospect, Krymsk, Sakhalin Island, Nellis, NS Century (came under US sanctions in November 2023) were idle during December off the coast of India, but from the end of December they began to change direction. Thus, NS Commander and Liteyny Prospect are now in the waters of Singapore, NS Century is located not far from them. The other three tankers have moved to the South China Sea and remain motionless there for now. In the last days of December and early January, all tankers began moving east, with four tankers listing the Chinese port of Qingdao as their destination, notes Kpler’s Victor Katona.

Difficulties with the supply of oil from Sakhalin-1 to India arose after the United States in December tightened measures to control compliance with the price ceiling and also imposed sanctions against the Emirati Sun Ship Management, which manages Sovcomflot tankers. Sokol is a premium grade and is trading above the Western oil price ceiling of $60 per barrel. Reuters reported that Sakhalin-1 had problems opening an account in the UAE for a new company through which payments for oil supplied to India should pass. Two Kommersant interlocutors in the industry heard a similar version. It was denied by the Indian authorities, which, after the outbreak of hostilities in Ukraine, became the main buyer of seaborne oil shipments from the Russian Federation. “There are no problems with payments. This is solely a question of the price at which our oil refineries will make purchases,” said Indian Oil Minister Hardeep Singh Puri.

At the end of 2022, Sakhalin-1 came under the control of Rosneft (it owns 20% of the project), after the previous project operator, the American ExxonMobil, stopped oil shipments due to Western sanctions. This was formally explained by the fact that the tankers serving the project lost coverage from Western insurers. This led to a months-long halt in shipments. As a result, the Russian Federation forcibly re-registered Sakhalin-1 under Russian jurisdiction: foreign shareholders could retain their shares, but in a Russian legal entity. Japan’s Sodeco (30%) and India’s ONGC (20%) agreed, but Exxon refused, resulting in the government promising to sell its 30% stake.

Sokol’s problems initially lay in the need to build a new trading infrastructure, says Victor Katona. Thus, setting up a trading company in Dubai does not present any particular problems, but opening financial and credit lines for a company that trades only Sokol – a grade of oil that has been trading above the $60 per barrel mark since the very first day of the existence of the price ceiling – turned out to be more difficult than assumed. Victor Katona notes that there was a version that problems with delivery to India were directly related to US sanctions – the NS Century tanker actually fell under them in November. However, given the growing number of inactive tankers, this option has now disappeared, the analyst adds.

Dmitry Kozlov