Sovcomflot v PDVSA oil case to be decided in UK Court

A UK Admiralty Court is to decide if Russian state-owned shipping conglomerate Sovcomflot will be allowed to take the oil from a tanker sent by Venezuelan state-run oil company PDVSA last October to the Caribbean with the intention of raising about $20m. Sovcomflot, the owner of the tanker held the oil in lieu of $30m that it says PDVSA owes for unpaid shipping fees. Sovcomflot sued PDVSA in the jurisdiction of Dutch island St Maarten in March. Five months after crossing the Caribbean, the NS Columbus (IMO 9312884) discharged its cargo of crude at a storage terminal on St Eustatius, an island just south of St Maarten, under a temporary decision by the St Maarten court. The situation arose unexpectedly because, in the past, Russia has been a staunch ally of Venezuelan President Nicolas Maduro, providing loans and oilfield investments. Russian oil firm Rosneft has lent money to PDVSA and in March was in talks to help PDVSA make a looming bond payment. So Sovcomflot might be putting its own finances ahead of President Putin’s national policy. Alternatively, it might be acting in a manner approved by the Putin administration, indicating that Russia is tiring of Venezuela’s lack of financial control.

PDVSA is trying to get cash into the weak Venezuelan economy, but owes tens of millions of dollars to Caribbean terminals, including the one in St Eustatius, which is owned by US NuStar Energy. PDVSA also owes money to shipyards in Portugal, while being unable to continue the required payments on half-built tankers in Iran and Brazil.

Sovcomflot provides about 15% of vessels that PDVSA charters to ship crude oil to its clients, not least because PDVSA’s fleet is deteriorating badly and no new ships can be paid for to replace the ones that are falling out of commission. Sovcomflot executives were reported to have complained in person last year to PDVSA President Eulogio Del Pino in the Russian city of Sochi, who agreed to a payment schedule (a meeting denied by PDVSA), but PDVSA was unable to make sufficient payments. Hence the latest move.

Venezuela tends to make sure that any cargoes that leave its ports legally belong to the clients rather than to PDVSA. In this case, although the crude onboard the NS Columbus had already been sold to Norway’s Statoil, the cargo was being carried in a tanker navigating with a bill of lading under PDVSA’s name.

According to database, NS Columbus is entered with North P&I on behalf of Member and registered owner Sigma Navigation Corp.