Europe plans insurance ban on transport of Russian oil and products
9 May 2022
The European Union is reportedly proposing to ban European vessels and companies from providing services including insurance linked to the global transportation of Russian oil and products.
This is part of the EU’s new sanctions package on Russia following its invasion of Ukraine and while member states are still discussing the precise terms, the intention is for this part of the package to come into effect by early June.
The move is a potentially significant tool because 95% of the world’s tanker liability cover is arranged through the London-based International Group of Protection and Indemnity Clubs and the organisation has to react to European law.
Without this insurance cover, Russia and its customers would have to find alternatives for risks including oil spills and mishaps at sea that can quickly run into multi-billion-dollar claims. Industry experts believe that without this cover Russia will have a very limited trading range.
The cover from the International Group is a basic part of contracts for the transportation of most oil cargoes. The IG provides reinsurance if claims exceed what the group’s 13 individual member clubs cover.
Russia’s Sovcomflot has a fleet estimated at 145 vessels with a total deadweight of over 12.6 million tonnes, including vessels owned through joint ventures. The Russian group specialises in energy shipping within harsh environments and owns the world’s largest fleet of ice-class vessels .
The insurance measures come on top of the EU’s plan to ban imports of Russian crude and refined products by the end of the year.
The planned restrictions on services would extend to providing “directly or indirectly, technical assistance, brokering services, financing or financial assistance, or any other services related to the transport, including through ship-to-ship transfers, to third countries of crude oil and petroleum products which originate in Russia or have been exported from Russia.”
The proposed rules also ban European citizens and companies incorporated in Europe from transporting Russian oil anywhere in the world. Vessels owned, chartered or controlled by European entities and individuals, even if they don’t fly the flag of one of the EU’s member states, cannot transport crude oil and petroleum products which originate in Russia.
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