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A Ban On Cargo Insurance in the Arctic Seas. Russia proposes solutions

 

Russia responds to Western restrictions on insurance coverage for vessels carrying Russian crude oil and petroleum products purchased above the price cap

Cargo Insurance
Gazprom’s Novy Port oil terminal in the Russian Arctic. (Source: Gazprom)

It is mostly known as the Group of 7 plus Australia coalition's oil price cap aimed to limit what Russia can charge for its oil exports to 60 dollars per barrel. As a result, sanctions led to the withdrawal of big businesses from the Russian market and its ports. However, shipping volumes are gradually recovering due to new stakeholders entering the market.

Right now, many shipowners do not use the Northern Sea Route simply because the cargo is not insured. While insurance is necessary. We have discussed the issue at a meeting with representatives of the People's Republic of China. Since China has a very powerful banking system, they would be quite capable of doing it, Russia’s Deputy Prime Minister and Presidential Plenipotentiary Envoy to the Far Eastern Federal District said.

The UK, the world's largest insurer of oil delivered by sea, has also expressed a willingness to adhere Western restrictions. This should have resulted in Russia losing access to Lloyd's of London's largest insurance market. Almost one-third of Russian oil is transported on tankers with British insurance.

Nowadays the Chinese are actively exploring the Northern Sea Route. Russia and China are negotiating over the Northern Sea Route cargo insurance. The international sea line Hainan Yangpu NewNew Shipping Co’s Arctic service now includes 4 container ships with a total capacity of about 9,000 TEU. In addition, UAE-based CStar Line and Korea's Sinokor have recently announced a new regular container transportation route linking China's major industrial regions and Russian port Vostochny in Wrangel Bay.

Sources:

Trutnev: Russia and China discuss Northern Sea Route cargo insurance

UK insures EUR 46.4 bn Russian oil since sanctions

The editorial board of The Arctic Century

 
25.01.2024
 

 

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