The leasing and construction of large ships have been proposed as a new area of expanded partnership between Russia and India by Russia. On December 9, the Russian government said this after a meeting that took place the previous day between Deputy Prime Minister Alexander Novak and Pavan Kumar, the Indian Ambassador Extraordinary and Plenipotentiary to Russia.
According to the statement, this was done so that India would not have to rely on European insurance services and the charter of tankers.
The Deputy Prime Minister applauded India’s decision to oppose the limitations on Russian oil prices imposed by the G7 on December 5. In eight months, oil exports from Russia to India surged to 16.35 million tonnes, while supplies of oil and oil products rose. The parties expressed their willingness to continue working together and increase their involvement in the sector of energy resource trade.
Since December 5, 2022, the G7 nations (the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom) and Australia have imposed a price ceiling on Russian oil. The ban does not apply to oil importers but rather to service businesses, such as tanker operators, marine insurers, etc., who will be unable to service the transportation of Russian oil if the contract price exceeds the ceiling of $60 per barrel.
In addition, an EU-wide embargo on imports of Russian offshore oil went into effect on December 5. Simultaneously, the United Kingdom is instituting a transitional period for oil loaded on ships before December 5. The validity period ends on January 19, 2023. The embargo will be extended to petroleum products on February 5, 2023.
Zvezda and MDL
An Indian team led by the Minister of Petroleum and Natural Gas and the Minister of Construction and Urban Affairs visited the Russian shipyard Zvezda in September 2021. The industrial plant is situated in the Primorye city of Bolshoi Kamen.
Rosneft representatives briefed the guests on the shipyard’s construction capacities and demonstrated its primary facilities. The two countries cooperate in numerous fields, including energy, shipbuilding, space, agriculture, and others.
During the visit, Zvezda Shipyard and the Indian Public sector unit Mazagon Dock Limited signed a letter of intent to collaborate on the construction of commercial ships.
A group from India had previously visited the plant in 2019, during which collaboration ideas were explored between Zvezda and the Indian shipyard Mazagon Dock Shipbuilders Limited. The companies want to collaborate in civil shipbuilding, exchanging best practices and experience.
The Zvezda shipyard is being constructed at the order of the Russian president. An investor consortium led by Rosneft is carrying out the project. Utilizing fundamentally new technology solutions to complete the task will allow it to become the most advanced shipbuilding production in the world. It is expected that construction will be completed by 2024. The project is being completed in two phases. The first phase facilities are already in operation, including a hull manufacturing block, painting booths, an open heavy outfitting slipway with a fleet of unique cranes and an advanced ship-transport system, and a transport-transfer dock.
The facility manufactures even the most intricate tankers, such as the Aframax. Interestingly, the Indian delegation also evaluated a ship in this category in 2019. The vessel was launched on September 2 and towed to the outfitting pier, where tests would be conducted. This is the second large-tonnage tanker in a series of 12 with a deadweight of 112,000 tonnes.
The origin of the name Aframax is the Average Freight Rate Assessment (AFRA) method. The Aframax tankers were developed due to the size restrictions created by heavily travelled sea routes when huge oil tankers entered.
Generally, the Aframax tankers weigh around or less than 1,200,000 DWT (Dead Weight Tonnes). Again, this size is a pretty stringent requirement. The Aframax tankers typically operate in the Black Sea’s European waters. In addition, these tankers serve as cargo containers in the Caribbean Sea, the North Sea, and one of the busiest and most essential routes in the Mediterranean Sea. Only Cochin Shipyard builds these sorts of vessels in India, but it has delivered only two of the country’s largest double-hull Aframax tankers, each with a 95,000 DWT displacement.
Among the major oil exporting nations in the world, the countries that rely on the Aframax ships sell less oil than the Middle Eastern countries. This is due to the massive volume of oil exported from the Middle East, which necessitates the deployment of larger naval warships. Additionally, maritime lanes tend to become obstructed because of such massive vessels, and tankers such as the Aframax tankers are invaluable assets.
Indian and Russian oil companies have been partners for many years. Together, they build a comprehensive platform for energy sector collaboration. Among the joint projects are Vankorneft, Taas-Yuryakh Neftegazotebycha, and Sakhalin-1 production. In addition to supplying India with hydrocarbons, Rosneft is a shareholder in the Indian company Nayara Energy.