6 Dec 2022 15:28

Price cap mechanism contains much uncertainty even after price announcement - Novak

MOSCOW. Dec 6 (Interfax) - The oil price cap mechanism contains many uncertainties even after the determination of the price restriction itself, Russian Deputy Prime Minister Alexander Novak told reporters on Tuesday.

"Oil continues to be sold under spot and [long-term] contracts, and there should be no price cap in these contracts. Whether countries are friendly or unfriendly - oil is delivered all over the world," he said.

Commenting on whether Russia will supply oil from the Sakhalin-2 project to Japan, which as a G7 country is a member of the Price Cap Coalition, Novak said: "There's a long-term contract with Japan, as far as I know, so what, are we going to change the contract there?"

"What does joining the price cap mean? There are so many uncertainties and nuances - we have to figure it out," he said.

Russian officials have previously stated that they will not supply oil and petroleum products to countries applying price cap policy.

The US, as well as G7 countries, the EU and Australia have formed the Price Cap Coalition and do not allow their companies to provide transportation, insurance, financial, brokerage and technical services related to maritime delivery of oil and oil products of Russian origin if their sale price exceeds a certain ceiling.

Oil price restrictions will temporarily not apply to shipments to Japan from Sakhalin-2. The U.S. has allowed all operations related to sea transportation of crude oil produced under this project until September 30, 2023, provided that it is "intended exclusively for import to Japan."

Meanwhile, the EU has authorized provision of services for transport of Russian oil by sea from the Sakhalin-2 project to Japan until June 5, 2023.