MercoPress. South Atlantic News Agency

Force-majeure applies to pre-war Russian diesel shipments bound for Ecuador

“The cargoes were bought and loaded before the war broke out,” Petroecuador's Noboa said

Ecuador's oil ruling entity Petroecuador has granted force majeure exemptions to shipments of Russian diesel which were already underway when the invasion of Ukraine started and western powers replied by imposing sanctions on Vladimir Putin's government

The two tankers loaded at the Russian port of Nakhodka between Jan. 26 and Feb. 11, carrying a combined 560,000 barrels, and are due in Ecuador anytime between next week and early April, according to BB Energy

Petroecuador declared force majeure on both vessels after banks declined to provide financing for the transactions to be completed.

The ships are the last of eight that BB Energy had agreed to supply to Ecuador after participating in a competitive bidding process held in December. The vessels were already at sea when the war broke out.

Petroecuador has been unable to secure funding for the previously-agreed deals after the United States and most western powers imposed sanctions on Russia, according to the company’s oil trading manager, Pablo Noboa.

At a time when diesel prices are soaring worldwide and countries disregard Russian supply, traders scramble for sources elsewhere.

Petroecuador also informed all suppliers of fuels that it shall not be able to keep accepting Russian fuels in the future.

“The cargoes were bought and loaded before the war broke out,” Noboa said. “It’s clear to us that BB Energy was not at fault.”

The two vessels — Ardmore Sealancer and Vendome Street — which have been bobbing off the coast of Ecuador for a week, are to be allowed to discharge soon after BB Energy agreed to ease payment conditions, Noboa said.

Although a fuel producer, Ecuador falls short of meeting its domestic demand and imports diesel oil for power generation, industrial use, ship fuel, and also as a diluent to make fuel oil.

BB Energy, the largest supplier of fuels to Ecuador after Trafigura Group Pte Ltd and Freepoint Commodities LLC, agreed to an open credit arrangement with deferred payment in order to deliver the cargoes, Noboa said.

The two vessels loaded at the Russian port of Nakhodka between Jan. 26 and Feb. 11, carrying a combined 560,000 barrels. They are expected to discharge at Ecuadorian ports between next week and early April, Noboa added.

”Due to the fact that economic sanctions on Russia may extend indefinitely (...) we proceeded with the declaration of force majeure on March 23, 2022,“ Petroecuador told Reuters.

”Simultaneously, an agreement was reached between BB Energy and Petroecuador, where the seller extended a credit for the amount of each shipment to make the payment, once the product was received,” the company also explained. As per the new agreement, payment can be made by Petroecuador 90 days after the arrival of the shipments.

Petroecuador is said to be already negotiating with US refineries about possible supply contracts.