Lloyd’s Register Withdraws Certification for Vessels of India’s Gatik Carrying Russian Oil
- May 26, 2023
- Posted by: Quatro Strategies
- Category: Energy
British maritime classification company Lloyd’s Register has notified India’s Gatik Ship Management that it would no longer certify 21 of its vessels by June 3 for carrying Russian oil. The news come as the latest setback for Gatik, whose 36 ships were deflagged by St. Kitts & Nevis International Ship Registry in April. Classification societies such as Lloyd’s Register in London provide services including seaworthiness checks, certification that is vital for securing insurance and entry to ports. Lloyd’s Register said, however, that 11 of the Gatik vessels it was declassifying were also certified by the Indian Register of Shipping (IRClass).
“Lloyd’s Register is committed to facilitating compliance with sanctions regulations on the trading of Russian oil,” the company said in a statement. “Where supported by evidence, we withdraw class and services from any vessels found by the relevant authorities to be breaching international sanctions.”
A major U.S. insurer, the American Club, also said it was no longer providing cover for Gatik ships, while Russian insurer Ingosstrakh said it would not work with Gatik in future.
Neither the insurers, Lloyd’s Register nor the flag registry spelled out exactly why they have dropped business with Gatik.
G7 and the EU have imposed a price cap on Russian crude of $60 per barrel in December in response to Russia’s invasion of Ukraine.
While non-EU countries can import seaborne Russian crude, Western shipowners and insurers are prohibited from handling such cargoes unless they are sold at or below that price.
Last month, spot prices for Russian crude rose above $60 a barrel and some ship insurance executives said they were nervous over non-compliance with the rules as they were unable to independently track the value of cargoes.
India does not recognize the sanctions imposed on Russia and has quickly become the biggest buyer of seaborne Russian crude.
Although Western sanctions against Russian oil has started to take its toll on Moscow’s export revenues, the opacity and limited oversight of the shipping sector means many vessels with cargoes from countries targeted by sanctions continue to sail by finding new flags and non-Western registries or insurers, raising concerns about safety and liability.
Ships typically have protection and indemnity (P&I) insurance which covers liability claims including environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage.
While Lloyd’s Register is dropping classification for 21 Gatik ships, at least 28 were listed as certified by the Indian Register of Shipping.
Gatik emerged this year as a leading carrier of Russian oil to India using a fleet of tankers that has numbered more than 40.
American Club, one of the world’s top 12 P&I insurers, which in total provide cover for about 90% of the world’s ocean going tonnage, said it previously covered most Gatik ships but as of early April was no longer covering them.
Ingosstrakh, a large Russian insurer active in ship coverage but not part of the top 12, said this month that its insurance cover for one of Gatik’s tankers expired in April and had not been renewed. The insurer also said it does not plan on working with Gatik in the future.
India imported 2.76 million tons of Russian oil in vessels managed by Gatik during the first four months of 2023, or 10% of its total Russian imports.
An estimated 1.36 million tons of Russian crude was earmarked for arrival in India in May and June on tankers linked to Gatik.
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