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Western insurers withdrew cover from tankers operated by
state-run Sovcomflot, Russia's biggest shipping group, which was
sanctioned following Moscow's invasion of Ukraine.
"Exxon has refused to take Sovcomflot's tankers," one industry
source said. Some cargoes meant for supplies to Indian refiners
were also hit as Exxon did not recognise the alternative cover
Sovcomflot had arranged from Russian insurers, according to the
sources.
Sovcomflot and Exxon did not immediately respond to requests for
comment.
The developments have unfolded as the European Union is due to
impose a ban on Russian oil tanker insurance and shows the major
impact ship insurance and re-insurance guarantees can have on
operations.
Russia's state oil champion Rosneft, a partner in the Sakhalin-1
project, has blamed Exxon for falling output, saying that since
mid-May the project produced hardly any oil.
Exxon's Russian unit, Exxon Neftegas Ltd, has cited difficulty
chartering tankers due to sanctions. Russian newspaper
Kommersant was first to report on Monday that production at
Sakhalin-1 collapsed following Exxon's refusal to work with
Sovcomflot. Oil output at the Sakhalin-1 project fell to just
10,000 barrels per day (bpd) earlier this year from 220,000 bpd
before Russia invaded Ukraine on Feb. 24. Russian President
Vladimir Putin signed a decree earlier this month establishing a
new operator for Sakhalin-1 that will be managed by Rosneft
subsidiary Sakhalinmorneftegaz-Shelf. The decision gives the
Russian government authority to decide whether foreign
shareholders can retain stakes in the project, giving them one
month to express interest or else losing their stakes. Rosneft
holds a 20% stake in Sakhalin-1, ONGC Videsh, the overseas
investment arm of India's state-run ONGC, has a 20% stake in the
project, and Japan's state-backed oil producer SODECO the
remaining 30%. In August, Exxon said it was in the process of
transferring its 30% stake in the oil and gas project "to
another party", without naming it.
(Reporting by Nidhi Verma and Sabrina Valle; Editing by Alex
Richardson)
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