Attempts to circumvent price cap are possible when exporting via ESPO and eastern ports of Russia - OFAC

MOSCOW. April 17 (Interfax) - The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) warned U.S. residents about the possibility of attempts to circumvent the price cap for Russian oil when exported through the ESPO pipeline, as well as eastern ports, particularly Kozmino, OFAC said in a statement.

OFAC said it was aware of reports that ESPO and other crudes exported via Pacific ports in Russia, such as Kozmino, may be trading above the price cap and may be using covered services provided by U.S. persons. "Some tankers may be manipulating their Automatic Identification Systems (AIS), a practice known as 'spoofing,' to disguise the fact that they have called at the port of Kozmino or other ports on Russia's eastern coastline. For example, basic vessel tracking data may show the tanker at one location, but more sophisticated reporting from maritime intelligence services may show that the vessel called at the port of Kozmino or another eastern port in the Russian Federation," OFAC said.

Spoofing can also be used to mask ship-to-ship transfers carried out to disguise the origin of Russian oil, it said.

Opaque shipping costs are another way of bypassing the price cap. As noted in the Price Cap Guidance, shipping, freight, customs, and insurance costs are not included in the price caps. "The failure to itemize these costs can be used to obfuscate the fact that Russian oil was purchased above the price cap, OFAC said. Sipping, freight, customs, and insurance costs must be invoiced separately from the purchase price of the Russian oil and must be at commercially reasonable rates. A refusal by a counterparty to provide documentation showing Russian oil or Russian petroleum products were purchased at or below the price cap should be considered a red flag for possible evasion of the price cap, OFAC said.