European and US Shipowners Contribute to Russia’s Shadow Fleet, Earnings Reach Over $6 Billion
Recent investigations reveal that European and US shipowners have sold at least 230 aging tankers to a shadow fleet used by Russia to evade Western economic sanctions and fund its conflict with Ukraine. This international investigation highlights the significant financial and logistical assistance provided by these countries to Moscow.
The Shadow Fleet: A Growing Concern
Shipowners have earned more than $6 billion since Russia’s 2022 invasion by selling the vessels to buyers in countries like India, Hong Kong, Vietnam, and Seychelles, which are not enforcing sanctions against the Russian Federation. According to the investigation, Greek owners led the pack with the sale of 127 vessels, followed by UK companies with 22 sales, and German and Norwegian owners with 11 and 8 sales respectively.
Global Involvement and Financial Gain
Owners from 21 out of 35 countries that have imposed sanctions on Russian oil trade have sold tankers to the shadow fleet. The investigation, led by Dutch investigative outlet Follow the Money (FTM), involved newsrooms from nine countries. These sales not only boost the financial coffers of shipowners but also facilitate Russia’s evasion of international sanctions.
Impact and Usage
Western governments assert that ships in the shadow fleet are used for transporting Russian oil, espionage activities for Moscow, and the destruction of vital undersea infrastructure such as cables. The team collaborating with the Kyiv School of Economics analyzed a substantial number of maritime freight and ship registration records and believes the 600-strong shadow fleet accounts for approximately 70% of Russian oil exports.
Case Study: Greek-Sold Tankers
An illustrative case involves two 15-year-old Greek-owned tankers that were purchased by a company based in Hanoi. These tankers were renamed and transferred from Malta to Panama. They later collected over 120 million liters of Russian oil from the port of Ust-Luga, located near the Estonian border.
Price Mechanism and Market Dynamics
The introduction of an oil price cap in late 2022 by the G7 and EU, which barred companies from facilitating oil sales above a certain price, led to a significant increase in the demand for vessels that could be registered in non-Western jurisdictions. Consequently, the value of these aging vessels doubled.
“A lot of European shipowners had old tonnage that they thought wasn’t really worth much. All of a sudden it doubled in value—so they scrambled to sell it.”
Belgium’s Contribution
The Belgian marine transport group CMB.Tech sold five tankers for $135 million, which were eventually incorporated into the shadow fleet. A spokesperson for CMB.Tech acknowledged that they were no longer responsible for the vessels after their sale.
EU Regulations and Continued Sales
In late 2023, the EU introduced rules requiring companies selling vessels to third countries to ensure they were not used to circumvent sanctions. Despite these measures, 32 European-owned tankers have been sold into the shadow fleet since then. further EU and US efforts to tackle this issue have included barring individual tankers from EU ports and services if they are found to be transporting Russian oil or involved in dangerous shipping practices.
Environmental and Safety Concerns
Many tankers in the shadow fleet lack Western insurance, do not enter European ports to be inspected, and are in poor condition, posing a significant environmental risk. The EU has already sanctioned about 70 tankers and plans to add 74 more to the list in the coming weeks.
Challenges in Enforcement
Legislation aimed at outlawing the sale of vessels into the shadow fleet faces resistance from member states with significant shipping industries, including Greece, Cyprus, and Malta. Efforts to address the issue must balance the need for enforcing sanctions with the economic interests of these countries.
A view of the port of Ust-Luga.
In conclusion, the sale of tankers to the shadow fleet by European and US shipowners continues to be a significant issue, highlighting the complex interplay between global trade, sanctions enforcement, and economic interests. Addressing these challenges requires a multi-faceted approach that echoes the international collaboration seen in this investigation.
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