Page 13 - EurOil Week 18 2022

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Bank reportedly bars Litasco

from trading oil derivatives

GLOBAL GENEVA-BASED Litasco, the trading arm of trade with Russia – and despite public pres-
Russia’s largest privately owned crude producer sure to sever ties with Russian firms. It has,
Lukoil, has reportedly lost much of its access to for example, been able to take advantage of its
global oil derivatives markets. status as a Swiss-based subsidiary of a Russian
Sources knowledgeable about the matter told company to charter tankers to deliver oil to
Argus Media on April 29 that at least one bank the UK, despite that country’s formal ban on
had shut Litasco out of the market by declining ships owned, operated or chartered by Russian
to provide clearing services for the Lukoil subsid- interests.
iary’s derivatives trades. Even so, the bank’s decision to deny clearing
Argus did not name the bank in question, services for derivative trades signals that Litasco
but its sources said that this move had left the will come under closer scrutiny because of its
trading company unable to trade its derivatives affiliation with Lukoil.
and therefore without its usual means of hedging Vagit Alekperov, Lukoil’s long-time president,
exposure to physical products. They also indi- resigned from his post last month after being
cated that the bank’s decision had far-reaching named as a target of the UK and EU sanctions
effects that were posing significant challenges to regimes. Alekperov did not explain the rea-
operations. son for his departure, but an unnamed source
As of press time, the report could not be con- familiar with the matter told Reuters that he
firmed. Neither Litasco nor the bank responded had stepped down so that his status as a target
to Argus’ requests for comments. of the trade restrictions would not affect Lukoil’s
Litasco has been under no small amount operations.
of pressure in the wake of Russia’s invasion of Lukoil has come closer than any other Rus-
Ukraine in late February. At least one oil broker- sian oil company to speaking out against the
age has stopped working with the company to Kremlin’s war on Ukraine. In early March, the
carry out physical and derivatives trades since firm’s board of directors issued statement urging
the beginning of March, Argus noted. an end to the conflict and saying: “We strongly
Nevertheless, the trader has found ways support a lasting ceasefire and a settlement of
to continue operating in Europe even after problems through serious negotiations and
the introduction of policies designed to cut diplomacy.”™

NEWS IN BRIEF

POLICY embargo on Russian oil. It is reported that Parliament on May 4. The sanctions will
they will be allowed to buy Russian oil exports be phased in over the next year with crude
Czechs join Slovakia and until the end of 2023, while other states have deliveries banned in six months and refined
productions by the end of the year, von der
to cease crude deliveries in six months.
Hungary in demanding temporary exemption from the planned full Leyen said.
Bulgaria is also reported to be seeking a
exemption from EU embargo embargo on import of Russian oil to the EU if Poland urges EU to slap
such an option is provided.
on Russian oil virtually all its needs, while Hungary is around
Slovakia is dependent on Russia for
Czechia, Slovakia and Hungary appear to have 65% dependent and Czechia 30%. Bulgaria’s sanctions on Russian oil
won a carve-out from planned EU sanctions Lukoil-owned refinery supplies 60% of the and gas
against exports of Russian oil because of their country’s needs. The countries’ refineries are
continuing heavy dependence on Russian adapted to use high-sulphur Russian crude Poland has urged its European Union partners
supplies. Hungary had threatened to veto the and processing of different types of oil for to unite and impose sweeping sanctions on
sanctions unless it got its way and has still not them is not immediately possible. Russia’s oil and natural gas sectors over the
fully signed up to the plans. Slovakia is also The EU will sanction all Russian oil war in Ukraine, and not to cave in to pressure
still pushing for a longer transition period. imports, both crude and refined and both oil to pay for their gas in Russian rubles, apnews.
On May 4, Reuters reported that Czechia delivered by ship and pipeline, but the ban will com reported on May 3.
joined Slovakia and Hungary and is also be “phased in in an orderly way,” EU President The appeal came as EU ministers met in
seeking an exemption period to the EU Ursula von der Leyen told the European Brussels to discuss their response to Russia’s

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