India's Oil and Natural Gas Corporation (ONGC) has reportedly failed to find buyers in its tender to sell a cargo of Russian crude, just days after the state-owned oil giant said it did not foresee any challenge in selling its share of crude from Russian oilfields or repatriating dividends from there.

Difficulties obtaining letters of credit (L/Cs) are amongst the financial, shipping and reputational risks for buyers of Russian oil which, despite it being marketed at deeply discounted prices, is subject to a growing number of restrictions as part of the backlash against Moscow for its invasion of Ukraine.

L/C obstacles

"Based on present applicable sanctions and removal of five Russian banks from Swift arrangement, the company does not foresee any challenge in selling crude oil or repatriating dividends except that scrutiny of financial transactions may be higher than usual," ONGC Videsh, the overseas arm of state-run oil giant, said in an emailed response to India's Economic Times published on 4 March.

But while there many potential buyers hoping to profit from Russian oil at bargain prices, they appear keen to avoid the adverse publicity that could come with bidding in an open tender, and difficulties obtaining L/Cs is another obstacle.

"I think [buying] interest is always there, but there are hurdles to cross like getting a L/Cs and possibly making headlines. Sensitive times now," a Singapore-based crude oil trader told S&P Global Commodity Insights according to a report published on 11 March.

Indian exposure

ONGC Videsh, the overseas investment arm of India's state-run oil producer, failed to attract buyers for May-loading Sokol crude.

It has a 20 per cent stake in Russia's Sakhalin-1 project and sells its share of oil through tenders.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.