Russia, under various European sanctions and a $60-per-barrel oil cap since December 2022, is allegedly still selling oil using a 'shadow fleet' of old tankers purchased from Europe.
In a report published in early February, the independent journalism platform 'Follow the Money' stated that Western shipowners earned over €6 billion by selling old oil tankers to a shadow fleet carrying Russian oil.
The platform reported that the ships were used to transport Russian oil and circumvent sanctions.
According to the report, at least 230 ships, mainly from Greece, the UK, and Germany, were sold to the shadow fleet, helping the Kremlin bypass sanctions on Russian oil trade.
The shadow fleet, consisting of more than 600 tankers in total, is estimated to carry 70% of all Russian oil exports.
Elisabeth Braw, a senior fellow with the Atlantic Council's Transatlantic Security Initiative in the Scowcroft Center for Strategy and Security, told Anadolu that shadow fleets have existed for many years.
Braw explained that these fleets are not officially recognized and consist of ships operating outside the official maritime system, changing ownership frequently.
Stating that it is difficult to find the owners of these ships and that they are usually operated by 'plate companies' that have no activities, she said, 'The ships often change flags, and they are flagged under countries that have no maritime expertise for the most part. So it's difficult to track them using the flag registration.'
These are vessels that have essentially served a lifetime with an official shipping company, she said and added, 'Then that shipping company sells them to essentially an obscure buyer that then uses them to do the sort of activities that shadow vessels do.'
- Shadow fleets lack insurance
Another characteristic of the shadow vessels is that they lack functioning accident insurance, called P&I insurance, Braw said.
Braw stated that they have a 'piece of paper' that the ships in question are insured, but this has no value.
She said that when ships follow international rules, they are regularly maintained, regularly inspected, maintained and are flagged in countries that have maritime expertise.
'Their owners can easily be found, and they have insurance. So when there is an accident, the insurance company, the flag state, and the owner get involved,' she explained.
'But when a shadow vessel has an accident or causes an accident, none of that applies,' she said, adding that usually the coastal states, where an accident occurs, have to bear the burden.
Braw stated that this creates a significant issue, as coastal states are not responsible for these incidents, yet they are still required to intervene.
She explained that, for example, if a shadow vessel explodes, catches fire, or starts sinking, the coastal state is obligated to intervene by extinguishing the fire, rescuing the crew, and preventing oil spills.
'That's a huge problem and we have seen it several times already. The problem will continue to grow because these vessels are not getting any younger and they keep sailing through the waters of countries that then have to intervene and try to limit the damage whenever there is an incident or accident,' Braw noted.
- 'Shadow fleets undermine Western sanctions'
In response to the inquiry about the report by Follow the Money, Braw stated that while selling old tankers to buyers outside of Russia is not illegal, it is important to note that Moscow is currently under sanctions.
Ordinarily, nobody would want to buy a tanker that's retirement age, however shadow vessel owners buy it anyway 'because they make good money transporting Russian oil above the price cap,' Braw stated.
'There are people in Western countries and ship owners in Western countries that act, I would argue, unethically, by selling their old tankers to these individuals, and they, as a result, keep this shadow fleet going,' she said.
She said that shadow fleets undermine the Western sanctions on Russia and enable Russia's war against Ukraine.
'But it's not European countries selling them. It's unscrupulous or immoral. I would argue immoral ship owners are selling them, and there is nothing European governments can do about that because, in a market economy, companies can sell and buy as they like, as long as they don't violate sanctions,' she explained.
Referring to the '€6 billion in revenue,' Braw said, 'Tankers are expensive, and the owners of shadow vessels are willing to pay a lot of money for these ships, simply because they know they can make a lot of money transporting Russian oil above the price cap, so I'm not surprised at all.'
- New sanctions on shadow fleet
On February 19, the EU member states agreed on new sanctions banning aluminum imports from Russia and targeting the Russian shadow fleet.
The new sanctions, the full details of which were not shared, will include a phased ban on the import of Russian aluminum products into the EU and stricter measures targeting crude oil sales.
A total of 73 shadow fleet tankers that Russia uses to export crude oil by circumventing restrictions, some Russian banks, and many individuals and companies will be added to the sanctions list.
Meanwhile, Russian officials argue that the world is not limited to Western countries and shadow fleet are no different from other tankers.
By Murat Temizer
Anadolu Agency
energy@aa.com.tr