“Why does Russia still continue to trade oil with the EU using a shadow fleet, and how to stop it?”, — write: epravda.com.ua
Why can Russia still finance the war machine? Because he has petrodollars, a lot of petrodollars. Why did sanctions not solve the problem? Because it turned out that international tanker transportation is vulnerable to bypassing the usual rules. This is how the Russian shadow tanker fleet, numbering more than 600 vessels, was born. Together with the fleet used by sanctioned Iran and Venezuela, the total number of shadow tankers exceeds 1,000 units. Moreover, a shadow fleet of liquefied natural gas has already begun to form. Due to this, 92% of oil sales are carried out by the Russian Federation through the shadow fleet – without observing the price ceiling of 60 dollars per barrel. An average of 3.12 million barrels are transported daily, and 60% of Russian oil passes through the Denmark Straits. All this generates up to 10 billion in extra income – only due to the difference between the “ceiling” and the real selling price. Oil dollars. Many petrodollars Oil exports are traditionally a key source of currency for the budget of the aggressor state. In 2023, the Russian Federation earned $188 billion from oil exports. It is expected that in 2024, the volume of revenues will remain almost unchanged – $187 billion.Advertisement: Accordingly, the Russian federal budget last year received 8.2 trillion rubles from the sale of oil, and budget revenues for the first 10 months of this year already exceed last year’s by 46%. Only officially, 30% of these revenues are used to finance military needs. Sanctions response to the shadow fleet Sanctions have become a way of countering the shadow fleet. Great Britain added 73 tankers to the sanctions list, of which 30 were added on November 26, the US has already imposed sanctions against 42 tankers, and the EU – against 17. The US and EU are preparing further major, possibly even, sanctions escalations to counter the shadow fleet. Read also: Financing aggression: Russia’s oil and gas revenues exceed 680 billion euros Advertisement: A sanctioned tanker essentially turns into a shuttle that can travel between jurisdictions that do not recognize sanctions. That is, sanctions do not necessarily stop the circumvention of the price ceiling, as colleagues rightly note. What’s wrong with the shadow fleet? The shadow tanker fleet is nothing more than a diagnosis of the long-term opacity of the entire system of international sea transportation of oil. The problem is much deeper than it seems. Here are some of the options for violations, which in fact mean the circumvention of sanctions, but legally are not necessarily a violation. – Transshipment of Russian oil from ship to ship in the open sea. STS transfers in EU waters are estimated at €1 billion per month. Thanks to this, in fact, Russian oil still enters the EU. – Constant change of ship flags, use of front companies. – Refusal of the Russian shadow fleet from the services of Western insurance companies and fictitious insurance policies. Some of the tankers of the shadow fleet are insured by Russian companies, in particular, and under-sanctioned RNPC, Ingosstrakh. Hong Kong has the largest share of shadow fleet insurance. But only 8% of tankers have Western P&I insurance. – Falsification of oil price data, forgery of certificates, use of double documentation. – Use for calculations of banks of countries that do not support sanctions, complex calculation schemes, cryptocurrency transactions, use of alternative payment systems. – Change of the recipient during the movement of the vessel. Threat to the environment In addition to financial consequences, the shadow fleet creates environmental risks. In September, 79% of tankers carrying Russian oil were older than 15 years. The collision of a tanker of the Russian fleet in Danish waters has already been recorded, which miraculously did not lead to an oil spill. At the same time, due to its conservatism, international law does not have an answer to the question “how to stop it.” What solutions are discussed1. Introduce individual sanctions against tanker captains and crewing companies. The captain and the carrier company bear full responsibility for the transportation of cargo by tanker from the moment of loading and unloading. They are responsible for checking the provided certifications regarding the price of the cargo and possible resale of the cargo during the flight to another company (for example, with a change of terms from FOB to DES/DAP/CIF). Currently, there is a deliberate practice of ignoring due verification of compliance with price ceiling sanctions. The prospect of individual sanctions should strongly discourage captains from contacting the Russians, or they will simply turn into exiles. 2. Adequate control over documents and insurance of tankers. The route of the shadow fleet, the average age of more than 80% of tankers of which exceeds 15 years, passes through territorial waters, while creating the risk of imminent environmental disaster. If anything, the costs of liquidating the consequences of the accident will fall on the governments of the countries in whose territorial waters it occurs, because insurance companies not from the P&I club do not have sufficient capital or are generally dubious. There are also documented cases when they provide insurance for tankers for the transportation of crude oil that is transported above the price ceiling, at the same time writing in the insurance a clause on the removal of responsibility in the event of such a violation of sanctions, which removes from them full responsibility in the event of an accident and oil spill .3. Create a common monitoring system for STS operations and block such overloads. Such a system is necessary for proper enforcement of sanctions and avoidance of oil spills during such ship-to-ship transshipments by the shadow fleet. Strictly speaking, it is still not clear how to counteract this, but there is also a great lack of information about such cases. 4. Monitor financial transactions and sanction banks involved in shady schemes. Banks carry out operations related to the financing of transportation, insurance, and sale of oil above the established ceiling. Imposing sanctions on offending banks makes it much more difficult, if not impossible, to sell oil to circumvent sanctions. It is more difficult to influence the ruble-rupee/yuan currency pairs, but the clear identification of banking institutions allows to influence the prospect of secondary sanctions. 5. Sanction companies/ports/refineries involved in the unloading and processing of oil from sanctioned tankers Sanctioning individual tankers removed them from the commercial services market for a long time. However, some of them resumed transportation due to the lack of punishments for the companies that received, transported, and unloaded oil from these tankers. The imposition of point sanctions on ports, refineries or companies that carried out STS operations removed authorized tankers from commercial circulation. In fact, we all now have to correct the crisis situation that has been developing in sea transportation for decades. Given the imperative adherence to the norms of international law, this process is slower than desired. I think we need to think in terms of wartime needs and be more decisive, because otherwise Russia will just continue to make crazy money and pay for the creation of missiles. Also, it’s important to be on the same page about taking steps to stop the shadow fleet. The public, experts, governments – we have two common problems: the shadow fleet and Russia.
