EXCLUSIVE Russian oil cap doubts spur insurer fears of ships left at sea

LONDON/BRUSSELS, Nov 10 (Reuters) – Insurers risk oil tankers stranded at sea if they do not get immediate clarity on an unfinished G7 and EU plan to cover Russian crude prices, two senior industry executives told Reuters.

The Group of Seven (G7), which includes the United States, Britain, Germany and France, agreed in September to impose lower prices on Russian oil sales.

U.S. officials said the move is to allow activity to continue, which is expected to begin on December 5, which could trigger price shocks after the EU’s comprehensive sanctions are approved in June.

And with just three weeks to go, time is running out to fully convince the shipping industry that it works.

The concern centered on insurers discovering that oil in transit that was believed to have been sold below cost was actually oversold.

This can lead to the withdrawal of insurance coverage as well as buyers refusing to accept delivery, which risks financial and logistical headaches and environmental hazards.

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“If the time is very short, I think everyone will have a plan B to de-risk, cut off, stay away, maybe conclude new contracts until there is some clarity,” said George Voloshin, a global anti-financial crime expert. ACAMS, the Association of Certified Anti-Money Laundering Specialists, consults with oil industry banks, dealers and insurers.

Buyers and traders will have to figure out what to do with packaged cargo that could be subject to sanctions if insurance is cut mid-journey, complicating a strategy of losing money in the wake of Russia’s invasion of Ukraine.

“It’s probably going to be very messy,” Voloshin said.

A European Commission official said the bloc was aware that more details were needed because businesses were running out of time to learn about their obligations, but the issue should be addressed at the G7 level.

The official spoke to Reuters on condition of anonymity because he was not authorized to speak about the matter.

U.S. State Department Ambassador James O’Brien, who heads the coordination of sanctions against Russia, said the G7 countries are ready with all operational details and technical discussions on pricing and administration are underway.

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“Sanction Islands”

But if information gaps remain on the cap, oil-filled tankers can be left uninsured and stranded around ports, causing major security concerns and cleanup costs for neighboring countries in the event of a spill.

Mike Salthouse, head of claims at Britain-based Global Ship Insurance North, said: “In that case the ship is out of danger and the financial and technical services are removed and no one takes the cargo.”

He added: “This is a bad development as no one wants uninsured ships to be kept off the coast.”

Salthouse said that shipowners who receive nothing for several months “will pay a price in the decisions they make about carrying cargo in the future”, which can be seen as a disincentive.

If that happens too often, it will go against what the EU/G7 alliance can achieve.

Although the EU approved the rate reform last month, insurers still point to unpublished details of the law, which are incomplete but more detailed U.S. Treasury guidance, specifically on guarantees that insurers won’t face surprise setbacks between cruises.

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Lars Lange, Secretary General of the International Marine Insurance Union, said: “We need a regulation in the G7 community, ie the US – where we have provisional guidelines – in the UK and the EU.” .

“If we get different regulations from these three ‘sanction islands,’ we fear that we will struggle to comply with all of them at once,” Lange said, adding that any ships seized by the ports would have serious consequences.

IUMI and the separate International Group Insurance Association have notified G7 and EU governments of their directives to ensure that guarantees that a Russian cargo is sold in line with its capital must be verified before an owner agrees to load. Carry the load.

Edited by Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.

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