Obscure entities in Dubai, unknown insurers, a new market entrant – several indicators point to Moscow creating a new shadow liquefied natural gas (LNG) fleet following the latest EU sanctions on Russian LNG transshippers.
According to a Bloomberg investigation, ownership of at least eight vessels was transferred to unknown companies in Dubai, United Arab Emirates, citing global shipping database Equasis; moreover, among them were four ice-class vessels that had already received Moscow’s approval to cross Russian Arctic waters this summer.
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At least three of them also have their insurers listed as “unknown,” she said, citing an International Maritime Organization database — a classic feature of shadow fleets used by authoritarian regimes to evade sanctions.
While the publication said it could not trace the vessels directly to Russian entities, they bear all the hallmarks and characteristics of a Russian shadow fleet.
“In the tight-knit LNG industry, which is several times the size of the oil market, it is highly unusual for an unknown name to procure specialized carriers that can cost hundreds of millions of dollars,” Bloomberg reports.
Questionable vessels and ownership
Four of the vessels – Asya Energy, Pioneer, New Energy and Mulan – belong to a company unknown in the industry called Nur Global Shipping, which is said to be entering the energy sector in 2022. Two insurers of its vessels were listed as “unknown”.
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Ownership of the recently built ice-class vessels – North Air, North Mountain, North Sky and North Way – has been transferred to Dubai-based White Fox Ship Management without an official office.
While Russia uses a shadow fleet to avoid G7 oil sanctions, transporting LNG requires more technically proficient crews and more complex technology — which Bloomberg says has made them easier to track because they account for less than a tenth of the 7,500 oil tankers worldwide.
Avoidance of sanctions
Russia, the world’s fourth-largest LNG exporter, is likely scrambling to find alternative routes for the lucrative gas, which continues to fund its war machine in Ukraine after the EU’s 14th sanctions package.
The most recent sanctions include, in particular, a ban on transshipment services of Russian LNG in the EU for deliveries to third countries.
Transshipment is the process by which cargo – or in this case LNG – moves between vessels during its journey to its final destination.
While transshipment of LNG at sea has been much more difficult than oil, Malte Humpert, founder of the DC-based think tank Arctic Institute, told Bloomberg that such operations “have been going on at the Kildin anchorage north of Murmansk for years,” referring to the Russian port beyond the Arctic Circle — which might explain the licenses needed to cross Russian Arctic waters.
Agathe Demarais, a senior member of the European Council on Foreign Relations, likens Western sanctions to a game of pillion when it comes to rumors of a new Russian LNG shadow fleet.
“It is no surprise that Russia is resorting to building a shadow LNG fleet, just as it built a shadow oil fleet to circumvent the G7 and EU price cap on Russian oil exports,” Demarais said.
“Moscow’s willingness to assemble shadow fleets serves to illustrate the fact that sanctions are a one-shot game – once a sanctions circumvention network is established, it will be targeted by Western authorities and then replaced by another in an endless game. cats and mice.”
With Russia’s move to avoid the G7 price cap proving somewhat successful, the West would likely have to step up its game to effectively enforce the sanctions and ensure they actually have the intended impact on the Russian economy.