Russia’s state-owned oil giant Rosneft wants its Western buyers to accept new terms and pay penalties from 2019 if they do not pay for supplies in the event that new U.S. sanctions disrupt the Russian major’s oil sales, trading sources and Rosneft’s draft contracts reveal, according to Reuters.
A Rosneft tender document seen by Reuters showed the company had asked its oil buyers to accept a new clause in its 2019 annual tender to sell oil products.
“No sanctions … shall terminate or amend any obligations of the parties stated by the contract,” the document said.
It also said that if a buyer walks away from the contract because of sanctions, it must compensate Rosneft with a payment that could either be a fixed amount or a sum calculated on the basis of the contract terms.
Rosneft’s buyers include some of the world’s biggest oil companies and traders such as BP, Royal Dutch Shell, Total, Vitol and Gunvor. They are fiercely opposing the move, according to trading sources. The stand-off is likely to force Rosneft to soften its demands, the sources said, adding that the development shows the extent to which the state-owned oil giant is concerned about widening U.S. sanctions on Russia.
“It is all very uncertain with the sanctions and Rosneft is clearly worried and is trying to minimize possible risks,” said a trading source with a European major. “We said no, we couldn’t accept this,” he added.
Russia has been under U.S. and EU sanctions since 2014 when it invaded and later annexed Ukraine’s Crimea peninsula. Russian businesses are preparing for a new wave of punitive measures expected in the coming days and months, with the companies trying to move away from dollar payments and tapping Asia for more of their financing and technology needs.
Rosneft is run by a close ally of Putin, Igor Sechin. He and his company have been under sectoral sanctions since 2014. The company is the world’s largest listed oil firm with oil and gas output at around 5 million barrels per day. It produces over 4 percent of global oil — on par with Iran.