Oil Price Cap Scheme Updates And Compliance Enforcement Alert

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  • The Directorate General of Shipping (DGS) issued an ‘urgent advisory’ for Indian recruiting agencies and seafarers concerning the ongoing situation in Iran and Israel to ensure the safety of Indian seamen in the vicinity of these two countries.
  • In response to evolving geopolitical dynamics and efforts to constrain Russian revenues amid ongoing conflicts, changes to the Oil Price Cap (OPC) scheme have been implemented, impacting the transport and insurance of specific Russian cargoes.
  • 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).

Key Changes to the Scheme

The two key changes in the Oil Price Cap (OPC) scheme are

1. Per-Voyage Attestations A requirement for attestations to be provided on a per-voyage basis. The attestations provided by shipowners to P&I clubs must be provided within 30 days of loading.

2. Itemized Price Information Itemized price information for ancillary costs to be recorded by those entities with access to price information and then provided to shipowners and P&I Clubs upon request (US) or within 30 days of such request (UK and EU).

Compliance Procedure

For the Club to provide assistance where an entered vessel is engaged in the carriage of Russian oil or petroleum products, the Member must have

Submitted an attestation as set out in Annex A to Circular No. 05/24 of February 2, 2024; and provided the voyage information in a SPIRE report, please see Circular No. 16/22 of May 25, 2022. Members are reminded that this information must be provided to the Club following any call to a Russian port or a transit of Russian waters, whatever the cargo.

OPC Evasion Methods

The alert identifies several methods that could be used to evade the OPC, such as
Falsified documents and attestations

  • Opaque shipping and ancillary costs
  • Third country supply chain intermediaries and complex and irregular corporate structures.
  • Flagging and re-flagging
  • The use of the “shadow” fleet
  • Voyage irregularities

Reporting a Suspected Breach

The Alert provides recommendations for industry stakeholders to mitigate the risks and negative impacts of these methods. It advises industry stakeholders to pay attention to the evasion red flags, retain and share relevant documents, consult alternative information sources, and follow the Coalition’s guidance and advisories. The Alert also summarizes the various bodies in each of the Coalition countries to which a report may be made in the event of a suspected breach. Members are reminded that for matters with a nexus to certain jurisdictions, such as the UK, reporting of a suspected sanctions breach is mandatory. If Members have any concerns about a suspected breach of the OPC, sanctions legal advice should be sought immediately.

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Source: Safety4sea