Two companies, one deal: exporting Russian oil. The latest investigation by the Financial Times casts more than a few shadows over Swiss-based Paramount Energy & Commodities Sa, whose oil trading activities from Russia to Asia halted around June after Western sanctions were imposed on Moscow following the invasion of the United States Ukraine had been imposed. As Tom Wilson and David Sheppard write, “the commercial activity was taken over by a Dubai company with an almost identical name: Paramount Energy and Commodities DMCC” which is turning to operators in the United Arab Emirates to carry out the transactions, “and tankers registered companies in countries like India and China for the transport of crude oil».
The two companies
Given that no law or sanction prevents Dubai-based companies from trading in Russian oil unless they use Western insurance, this could be a violation of sanctions if the company is owned or controlled by a European entity or a European citizen. This is also why Paramount SA and Paramount DMCC deny any association and reiterated to the FT that the two entities are managed “entirely independently”. So much so that Niels Troost, the Dutch entrepreneur who founded the Swiss company, has no “direct” stake in Dubai-based Paramount.
The activities of Swiss Paramount, one of the main traders of Russian oil to China in recent years, are currently suspended and their site is currently under construction. A stop that appears to be linked to European sanctions, which has notably frozen trade to China from the Russian port of Kozmino in the Sea of Japan.
Sanctions against Russia: the upper limit of 60 dollars per barrel
In June 2022, the EU Council adopted a sixth sanctions package banning the purchase, import or transfer of crude oil and certain petroleum products transported by sea from Russia to the EU. The summary on the Council’s website reads: “The restrictions will apply from December 5, 2022 for crude oil and from February 5, 2023 for other refined petroleum products”. The Union also prohibited “the related provision of technical assistance, brokering services, and funding or financial assistance”.
Finally, the upper price limit. This applies to crude oil and crude oil or bituminous mineral oils originating in or exported from Russia and transported by sea. “The cap is set as follows: $60 per barrel for crude oil, $45 per barrel for petroleum products traded below par (ie when the price of a financial instrument is lower than the face value of the security, ed.)” A cap of $100 a barrel instead for oil products trading above par. The intention of the 27 was to undermine Moscow’s energy revenues, which before the full-scale invasion of Ukraine accounted for 45% of the federation’s revenues. The $60 cap is actually about 20% below the main international reference price. However, the Ft explains how some oil traders are willing to take legal and reputational risks to continue trading with Russia.