Oil Firms Warn Madagascar Plan May Spark Trade in Russian Fuel

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessOil Firms Warn Madagascar Plan May Spark Trade in Russian FuelA group of companies including TotalEnergies SE warned that Madagascar’s plans to nationalize fuel imports could put them and their customers at risk of trading and using sanctioned oil.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — A group of companies including TotalEnergies SE warned that Madagascar’s plans to nationalize fuel imports could put them and their customers at risk of trading and using sanctioned oil.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe country’s parliament passed a bill on July 1 to create a state-run oil company that will oversee fuel imports, five weeks after Prime Minister Mamitiana Rajaonarison told Russian state-owned news agency Sputnik that an oil storage facility could be opened as part of a wider drive to secure Russian investment.Since Madagascar’s military seized power in an October coup, it has sought to forge closer ties with Russia. Colonel Michael Randrianirina, who led the coup and is now Madagascar’s president, met with Russian President Vladimir Putin in Moscow in February and has welcomed Russian military trainers and arms to the island. At the same time, Russia is looking for new markets for its oil, which has been sanctioned by the European Union and the US following its war on Ukraine.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againMadagascar only uses about one million metric tons of oil products every year, but the island sits on the Mozambique Channel, which facilitates the transit of nearly a third of the world’s seaborne crude shipments. Establishing a presence on the channel could help Russia open new markets across southern and eastern Africa.“Madagascar is simply too small a fuel market to justify this on commercial grounds alone,” said Shawn Duthie, the head of risk analysis for southern Africa at consulting firm Control Risks. “The real value is its geography: if Russia is investing in storage and logistics infrastructure, it’s likely thinking beyond domestic Malagasy demand and looking at its position for key Indian Ocean shipping routes.”The decision to nationalize oil imports ends a more-than 25-year-old arrangement with the industry body Groupement Pétrolier de Madagascar (GPM), whose members include units of TotalEnergies, Vitol SA, Rubis Energie SAS and Axian Group. Under that set-up, which followed the privatization of the oil industry in 1999, GPM oversaw the import tenders that permitted companies to sell fuel in the country.In a position paper seen by Bloomberg, GPM members expressed concern that the new state-run company “could source products from suppliers subject to international sanctions,” exposing its own members and their customers to those measures should they use the oil.“These products could become legally and commercially unusable for a significant proportion of distributors, logistics providers and customers.”It listed large customers that also operate in Western markets and could face problems should they have to trade in oil products from a sanctioned source. Those included Air France-KLM and other airlines, and international construction companies and mines owned or partly owned by Rio Tinto Group and Korea Mine Rehabilitation & Mineral Resources Corp.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.GPM also warned that the plan would threaten the country’s energy security by creating dependence on a single supplier. And in a July 7 press release, which Bloomberg was referred to when it asked for comment, the group expressed concern about the lack of consultation.When reached for comment, Harivelo Andrianarahinjaka, the managing director of the country’s hydrocarbons department, told Bloomberg that the plan had yet to be enacted. Energy Minister Radonirina Lucas Rabearimanga did not respond to questions. Russian Energy Ministry and the Kremlin spokesman Dmitry Peskov didn’t reply to requests seeking comments.The country hasn’t only been exploring possible deal with Russia. On July 21, President Randrianirina met with the head of the Oman Investment Authority to discuss economic cooperation over issues including fuel supply, his office said in a statement. That nation’s energy trade has also been hampered by the war in Iran.In recent weeks, the GPM has elevated its concerns to the highest levels of government. The body sent a letter to Madagascar’s prime minister, energy minister and the country heads of the World Bank and IMF last month following a private meeting with Rajaonarison. In it, the oil group called to suspend the draft law and start a consultation process. People familiar with the situation, who asked not to be named out of fear of repercussions, said the government has not changed its position but has held meetings with the industry body and may negotiate some changes to ensure supply continuity.Elsewhere, GPM warned that private sector oil storage and infrastructure projects could be put on hold should the state take control of imports, and that any supply or financial disruptions “could directly impact energy prices and, consequently, the entire Malagasy economic fabric.” The International Monetary Fund has also criticized the government for interfering in the oil products market and capping prices. Still, once this plan is enacted, it could represent a victory for Russia, which has long pursued closer business and political ties with southern Africa. In 2025, researchers at the Moscow-based School of Higher Economics prepared a document for Russia’s economic ministry in which they argued that the country should endeavor to supply gas to South Africa, potentially through ports in Mozambique. Russia has previously made efforts to break into South Africa’s energy markets. It has proposed building nuclear power plants in the country, and in 2024 Russia’s Gazprombank discussed a potential investment into PetroSA, South Africa’s state-run oil company. That plan fell through due to concerns over sanctions. Sign up here for the daily Next Africa newsletter and subscribe to the Next Africa podcast on Apple, Spotify or anywhere you listen.—With assistance from Eric Laperozy.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.