London Club highlights that as per the Club’s circular of 23 February 2023, Members potentially involved in the carriage of Russian origin oil and/or petroleum products are required for the policy year 23/24 to submit an annual attestation of Price Cap compliance in the form set out in annex A of the circular.
Cover for claims arising out voyages connected with the carriage of Russian origin cargo may be unavailable until the Club has received such attestation.
Members can use the company (normally the managers of the Owners) who arranged for the fleet to be entered with the Club as the company on whose behalf the attestation is to be signed.
Policy Year 2024/25 – Additional requirements if engaging in the carriage of Russian origin oil and/or petroleum products
As set out in the Club’s Circular of 6 February 2024, developments in sanctions imposed by the UK, EU and US mean that Members engaging in this trade are, for cargoes loaded after 20 February 2024, required to provide:
- an attestation of Price Cap compliance on a per voyage basis. Members can use the company (normally the managers of the Owners) who arranged for the fleet to be entered with the Club as the company on whose behalf the attestation is to be signed.
- sufficient ancillary costs information to show Price Cap compliance if requested by the Club.
The United States is part of an international coalition of countries (the Price Cap Coalition), including the G7, the European Union, and Australia, that have agreed to prohibit the import of crude oil and petroleum products of Russian Federation origin (Russian oil).
These countries, home to many best-in-class financial and professional services, have also agreed to restrict a broad range of services related to the maritime transport of Russian oil—unless that Russian oil is bought and sold at or below the specific price caps established by the Coalition or is authorized by a license.
This policy is known as the “price cap.” The price cap is intended to maintain a reliable supply of crude oil and petroleum products to the global market while reducing the revenues the Russian Federation earns from oil after its own war of choice against Ukraine inflated global energy prices.
Based on official guidance to the industry, the Club is likely to request ancillary costs information for trades involve red flag operations, including:
- STS operations outside Russia in high-risk areas for non-price cap compliance
- Loading operations in Russia involving opaque charterers and/or exporters.
Members should note:
- Cover for claims arising out of voyages connected with the carriage of Russian origin cargo may be unavailable pending the provision of the attestation for the relevant voyage and, if required, sufficient ancillary costs information.
- The Club is unlikely to reinstate cover for such claims if Members are unable to provide sufficient ancillary costs information due to a lack of a contractual rights to such information in their charterparties and any sub-charterparty.
- The Club is obliged to notify the failure to provide sufficient ancillary costs information to the relevant authorities of the Price Cap Coalition, who may take further actions against the Member even if the Member is not a subject of a Price Cap Coalition country.
Accordingly, Members should take steps to ensure that they have charterparty terms that require their charterers and any sub-charterers to provide Members with sufficient ancillary cost information promptly when requested. Appropriate clauses have been made available by industry bodies such as INTERTANKO and BIMCO.
