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Russian "ghost fleet" that continues to sell oil, this is how Moscow ignores sanctions / Over 7.2 billion dollars from only 25 ships
2024-10-10 18:11:19 / BOTA
Despite Western sanctions imposed after the invasion of Ukraine, Russia is continuing to sell its oil almost undisturbed.
And it does this thanks to a 'ghost fleet', a fleet that escapes the radar of international authorities, thus allowing it to bypass the blockades imposed after the invasion of Ukraine.
sanctions
Before Vladimir Putin's February 2022 invasion of Ukraine, Moscow's oil exports relied largely on Western tankers, which dominate the world's shipping fleet.
In an effort to limit the Kremlin's revenue, the United States, the European Union, the United Kingdom and other G7 countries have banned their companies from providing ships, insurance or financing for Russian exports after December 5, 2022, unless oil sold below market prices.
It was the moment when Russia began to build up its own fleet of ships registered in non-G7 countries. In the final months of 2022, the tanker market experienced a boom, as Russian companies and their brokers moved to buy used vessels and Western shipowners seized the opportunity to make golden deals.
As a lengthy investigation by the Financial Times reveals, these fleets were built thanks to the cooperation of Western entrepreneurs, who bought the ships and registered them to companies based in places as far away as the Marshall Islands, but using money from Russia's Lukoil. According to the British newspaper's investigation, since the first Western restrictions on Russian oil exports were introduced in December 2022, Moscow has created a fleet of more than 400 'ghost' vessels which currently move around 4 million barrels of oil per day outside the sanctions, generating billions of dollars a year in additional revenue for Vladimir Putin's war effort.
Western governments have so far succeeded in detecting and sanctioning individual vessels, but the rigging of offshore corporate structures has left Western officials scrambling to identify who owns the tankers, how they were purchased or who oversees their operations.
Western collaborators
The FT's investigation shows how Russia's Lukoil used its shipping arm to finance a 74-year-old British accountant named John Ormerod to buy Canis Power, one of the vessels later sanctioned by the West, and at least 24 oil tankers. others used, between December 2022 and August 2023, for a total cost of more than $700 million. As the paper reports, each vessel was bought by a different special purpose entity set up by Ormerod in the Marshall Islands, but Lukoil's Dubai-based Eiger Shipping DMCC secured the funds by prepaying the vessels' charter.
At the same time, Dubai-based companies linked to a Pakistani-born British shipping tycoon, Muhammad Tahir Lakhani, have been contracted to manage the ships, the FT said, citing sources familiar with the facilities. The complex series of deals would show how Lukoil, Russia's second largest oil producer, was able to finance the purchase of a fleet of ships while hiding its involvement from the public. Together, the 25 vessels are said to have transported about 120 million barrels of oil from Russia since they were bought by Ormerod. If we assume a cost of just $60 per barrel, the total would equal $7.2 billion in exports.
The trick also works because these transactions don't actually break any laws. This is because although Lukoil has been under US sanctions since 2014, neither Eiger Shipping DMCC nor its Dubai-based owner Litasco Middle East DMCC are sanctioned entities.
And so, it's all perfectly legal, as Dubai-based companies don't have to abide by Western restrictions unless they use G7 funding or services. These rules were designed to reduce the Kremlin's revenues, while at the same time allowing Russian exports to continue at least in part, so as not to increase global oil prices.
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