• Argentina-bound shipment halted after bank blocked payment
• Gunvor has a long-term contract with Russia’s Novatek

Ruth Liao, Anna Shiryaevskaya, and Jonathan Gilbert, Bloomberg News

WASHINGTON/BUENOS AIRES/LONDON
EnergiesNet.com 07 21 2023

Argentina’s state-run energy company Enarsa said a cargo of Russian liquefied natural gas was rejected over a payment issue, raising questions about the viability of similar shipments amid tightening scrutiny over their origin.

There was some confusion over the reason the cargo was refused. Enarsa President Agustin Gerez said Thursday that Banco de la Nacion Argentina wouldn’t accept payment for the fuel because of sanctions related to the Kremlin’s war in Ukraine.

The bank’s Madrid branch, which handled the transaction, “doesn’t pay for operations with Russian intermediaries,” Gerez said in a telephone interview. Neither the bank nor the branch could be reached for comment. The Madrid office is subject to European Union sanctions laws.

Argentina’s economy minister earlier this week said officials blocked the delivery because of sanctions, though the nation doesn’t have sanctions against Russia.

The incident highlights the complexity and controversy surrounding purchases of LNG from Russia, which many countries continue to import even as they ban other energy products from the nation. Across the globe, countries are vying for the super-chilled fuel to bolster their energy security, but paying for it is an increasingly thorny issue.

Sanctions by the US and its allies have cut off some of Russia’s top banks from the global financial system, and many companies and countries have independently shunned Russian transactions to avoid the risk of running into penalties. At the same time, buyers and sellers of commodities use a range of banks to facilitate their purchases, adding a further layer of complication.

Gunvor’s Role

Enarsa purchased the LNG cargo, valued at $38.55 million, from Gunvor Group Ltd. Gerez said Gunvor failed to clarify that the shipment was from Russia — which the trading company disputes.

It is “verifiably documented that the counterparty had been informed and was aware of product origin pursuant to contractual agreements,” Gunvor said in a statement Thursday. “There is clearly a misunderstanding and we are working with the counterparty to identify a solution to this matter.”

The decision by a European bank to self-sanction “has no bearing on the legality of the transaction or the legal policy of Argentina toward Russia,” it added. Gunvor said it alone ordered the vessel to depart in order to mitigate its losses.

Any inability to pay for the cargo is not the fault of Gunvor, the company said.

The longer the cargo stays on the water, the greater the risk that some of it will be lost as fuel naturally boils off. In addition, spot LNG prices have fallen since the time of the purchase, which could create further risk for Gunvor.

The company holds a long-term contract to buy LNG from Russia’s Novatek PJSC. The trader’s Flex Artemis vessel loaded the fuel via transshipment at the port of at Montoir in France in late June. It was outside Argentina’s Bahia Blanca terminal when it turned back on Tuesday, ship-tracking data compiled by Bloomberg show. The ship is now sailing northeast, parallel to the coast of South America, with an unknown destination.

— With Patrick Gillespie

bloomberg.com 07 20 2023