![Asian buyers are attempting to cancel their orders for Russian oil grade](https://wapi.topforex.trade/uploads/2022/04/Asia_News.png)
Buyers are now attempting to back out of Sokol orders, which were sold out for May-loading two weeks ago, according to sources familiar with the situation. According to the persons who asked not to be identified due to the sensitivity of the information, at least one shipment of the variety scheduled for loading in late May has been canceled, with several more refiners attempting to wind back purchases for June.
Because to the involvement of Sovcomflot PJSC, a Russian state-controlled company that transports crude from the Sakhalin-I project’s De-Kastri export terminal to consumers in North Asia, Sokol is being avoided. According to the experts, the company’s tankers are having trouble getting insurance from overseas corporations after it was included to a list of U.K.-sanctioned entities.
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While several Asian refiners have stepped in to acquire Russian oil after it was spurned due to Ukraine’s incursion, the episode shows that they must still be cautious. Marine insurance is important for both the buyer and other shipowners since it protects them from legal penalties such as cargo damage, collisions, and oil leaks. In the event of an accident, a lack of coverage could result in lawsuits and expose counterparties to significant damages.
An email seeking comment from Exxon Mobil Corp., which manages Sakhalin-I on behalf of a global consortium of Japanese, Indian, and Russian corporations, was not immediately returned. The oil major from the United States is looking to abandon the project. A spokesman for Sovcomflot declined to comment.
It’s unknown what will happen to the cargoes that have been canceled. They might be re-offered or held in onshore tanks using closed tenders. Buyers from China, South Korea, Japan, and India were interested in Sokol cargoes planned to arrive in May. Rosneft PJSC, Russia’s largest state oil company, failed to win a contest to sell millions of barrels of Urals crude this week.
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Along with Urals and ESPO, the Sakhalin-I Sokol stream is one of Russia’s principal export grades. Because it produces enormous amounts of diesel when processed, it is popular with refiners in North Asia, Hawaii, and even Australia. In about three to five days, the crude may move from De-Kastri to key refining hubs in China and South Korea.
As part of a long-term arrangement, Sovcomflot provides tankers for the Sakhalin-I project. The crude is loaded into the shipowner’s vessels in De-Kastri and transported to locations in North Asia. Buyers from other countries must charter other tankers to conduct ship-to-ship transfers off the coast of South Korea.
Due to restrictions imposed by the war in Ukraine, Russian oil trading is becoming more underground. The world’s largest independent oil trader, Vitol Group, has announced that it will stop trading with Russian petroleum by the end of the year, while majors such as Shell Plc and Exxon Mobil Corp. are working to unload their holdings and exit the country.
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