Country continues to export oil under severe restrictions
Russia continues to successfully trade its oil, still transporting it in colossal volumes by sea, despite tough prohibitive sanctions. Not only our officials speak about this, but they are also recognized in the West — in particular, the international agency Bloomberg writes about this. The key role in transporting «black gold» to interested buyers is played by the so-called «shadow» or «pirate» fleet of Russia: a squadron of oil tankers bought or chartered by unknown traders. This group has been plowing the world's seas and oceans for more than a year and so far has shown good efficiency in circumventing energy sanctions imposed against our country.
The task of creating their own flotilla of cargo-carrying ships was set for domestic commodity companies closer to the middle of 2022, at the height of the Western sanctions attack. At least, such authoritative sources as Bloomberg and The Wall Street Journal (WSJ) wrote about it. Russian producers of hydrocarbons already then understood that the embargo on the purchase of Russian energy resources, announced to our country by the European community, as well as further restrictions on the international sea transportation of «black gold», would force them sooner or later to look for more intricate ways of exporting.
They did not reinvent the wheel, but turned to the experience of Iran and Venezuela, which had also previously come under pressure from Western sanctions. Exporting companies simply began to buy tankers from shipowners who had long been providing their services in transporting raw materials from one continent to another. From a legal point of view, such a scheme should not have been burdened with unnecessary questions: if oil is delivered to a specific consumer on a ship flying the flag of an independent power, then no regulators have the right to make claims against such a vehicle. The Western media immediately began to trumpet the mass appearance of mysterious ships that sail the oceans and go unnoticed, as they cannot be detected by the most modern satellite radar devices.
According to CNN, «dark» or «gray» ships were those sold by European owners to little-known firms. According to the American TV channel, in the spring and summer of last year, our country monthly replenished its transport resources with 25-35 cargo carriers, thereby significantly expanding the volume and geography of oil exports. Tankers were bought from Iranian, Chinese and Venezuelan structures, which have been under sanctions for several years and have long learned to overcome these restrictions. The «gray» ships allegedly had impressive dimensions: their length could exceed 400, and their width — 70 meters. Their carrying capacity reached 100 thousand tons, so the sale of each batch of raw materials delivered to the open market smoothed out the power of the West's sanctions blow to the Russian economy.
In March of this year, CNN reported that the size of the «shadow» fleet, ready to facilitate the export of Russian hydrocarbons, grew to 600 vessels in less than a year, which turned out to be equal to 10% of the total number of large tankers in the world. According to the Federal Customs Service, in 2022 Russia increased the export of mineral fuels (crude hydrocarbons, finished fuel, bitumen, and so on) by almost 43% in monetary terms ($384 billion). Deliveries of specifically oil, according to Deputy Prime Minister Alexander Novak, increased by 7.6%. First of all, the «pirate» tanker fleet is to thank for this increase.
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In response, as is known, the West tightened its restrictions in the oil sector. First, the maximum price ceiling for oil supplied from our country was set at $60 per barrel. Shipowners transporting raw materials above this mark risked running into complaints from European regulators. Secondly, according to the 11th package of EU sanctions, which came into force on July 24, 2023, tankers suspected of transshipment of hydrocarbons from our country from side to side in neutral waters were forbidden to enter Western ports, that is, visit distribution nodes from which raw materials were sent through traders and other intermediaries to the most remote corners of the planet.
However, the tricks prepared by interested traders minimized the possibility of determining the true place of hydrocarbon production: West Siberian «black gold» was mixed in containers of sea carriers with Arabic or North African varieties, after which it turned from “toxic” into a completely legal product, against which no sanctions were any longer in effect.
Now, the EU (at the suggestion of Washington) is going to control such methods of trade tricks through satellite communications, which make it possible to monitor the movement of every large ship near traditional international harbors. In addition, another strategic restriction followed from our enemies — a final ban on providing insurance to tankers carrying Russian fuel. In particular, British firms, which are leaders in this sector of the world market, have deprived carriers from the “shadow” fleet of auxiliary accreditation: now shipowners will have to cover losses from their own budget in the event of any force majeure (breakdowns, weather disasters or pirate attacks).
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At first glance, the strike from Western sanctions has hit its mark. According to the International Energy Agency, our country’s revenue from oil exports in the first half of the year decreased by more than one and a half times: if in January-June 2022 cash receipts from foreign supplies of Russia’s “black gold” exceeded $120 billion, then the corresponding period of 2023 brought a little over $77 billion. But not everything is so simple. Asian and African states, despite sanctions risks, continue to actively close the internal energy balance with purchases of Russian fuel: in addition to China and India, Bangladesh, Mongolia and Vietnam are constantly interested in long-term contracts for the purchase of Urals. And according to the WSJ, after the reduction of imports by buyers from the EU, quick-to-profit intermediaries immediately began to resell «toxic» Russian fuel at exorbitant prices to needy consumers in North Africa: Morocco's imports increased from 600,000 to 2 million barrels; Tunisia, which had almost never bought our fuel before, now imports up to 3 million barrels of Russian oil products. Similar growth is observed in Algeria and Egypt. Who is transporting raw materials to those who want to buy affordable Russian energy resources? All the same «shadow» fleet. According to the American media, the owners of hundreds of large tankers are practically not worried about the new restrictions of the West and even the deprivation of insurance policies, they are ready to take risks for the sake of a sudden drop in earnings.
In many respects, this behavior of the sea carriers of «black gold» is due to the large number of legal «holes» contained in Western sanctions requirements, which were clearly adopted in a hurry. Yes, the ships that are part of our export armada cannot receive Western insurance, and they are also unlikely to be able to raid near European terminals. Only the fact of the sale of Russian oil (and at prices above the ceiling of $60 per barrel) still needs to be proven.
And this is not so easy to do, says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation. On the one hand, international ship tracking systems, such as MarineTraffic, show in real time the owner of a tanker and what flag his ship sails under. With regard to such ships, it will not be difficult to find out the port of registry and the route of further movement through satellite content.
But on the other hand, ship captains often turn off the auto-identification system, not allowing them to determine the dimensions and ways of their movement. And then the manipulations described above take place on the high seas with the mixing of different grades of oil. Russian-owned (or controlled) tankers go to the open sea and transship oil on board ships with a large deadweight (total payload), after which it is delivered to the final buyer. It is practically impossible to prevent such oil sales schemes, since the detention of «suspects» by any international law enforcement agencies will be regarded as piracy. In addition, according to the expert, the calculation of the ships that are part of the «shadow» fleet of Russia is rather speculative. Tracking systems determine the total number of tankers involved in the transportation of oil on the main trade routes offhand: they focus only on official export volumes of raw materials, and then estimate how much hydrocarbons are registered ships, and how many are unknown ships.
< p>There are no disagreements between suppliers and buyers regarding the delivered and paid cargo. “New consumers of Russian energy resources are concentrated in Asia. Transportation of raw materials to these regions takes three times longer than to Europe. Ships that deliver oil to an importer may not even call at intermediate European ports. These ships are registered with international maritime services, Yushkov notes. “Claims and secondary sanctions against them, of course, can be presented, but such lawsuits are likely to drag on for many years, and the defendants in them will not be Russian structures, but independent traders who are ready to fight for every extra dollar and barrel.”
Russia's growing track record of circumventing price ceilings and other Western energy restrictions is allowing Russia to earn billions of dollars in additional revenue. According to the Financial Times, deliveries to India in the second quarter alone brought our exporters at least $1.2 billion in windfall profits. At the same time, it is extremely difficult to accuse buyers of violating anti-Russian sanctions. The fact is that domestic producers are not going to defiantly violate the letter of the law: in accordance with all accompanying documentation, they load raw materials on board tankers at a price not exceeding the $60 threshold. But, as they say, «during the journey, the dog could grow up.» The final (in this case, Indian) customers process the purchase of oil at the place of delivery, in other words, in the ports of Calcutta, Mumbai, New Mangalore… The cost of barrels affixed in the final contracts is usually 15-25% higher than those that were noted in transactions with carriers. That is, the sanctions are not formally violated. Nevertheless, after unloading at the buyer's port, according to FT analysts, Russia received almost $70 per barrel. “Against this background, Moscow’s income from the sale of “black gold” reached the highest level since the introduction of restrictions in July,” states the American edition.
Western regulators, of course, understand that their attempts to minimize the export of Russian oil have not been successful so far. Therefore, they seek to inflict «pinpoint» strikes on violators of their sanctions. For example, the Indian company Gatik Ship, whose ships, until recently, bypassing sanctions, exported Russian oil by sea, has reduced the composition of its armada by ten times. In May, the British classification society Lloyd's Register withdrew the certification of the lion's share of the cargo carrier's ships, which was not even caught, but only suspected of providing intermediary services to our country's commodity holdings. Most of the Gatik Ship tankers were denied insurance policies and banned from entering international ports. As a result, only four ships remained at the disposal of the Indian company, suitable for operation without further legal consequences. “The fleet is shady for that, so as not to advertise whose raw materials, where and at what prices it transports,” Artem Shakhurin, an expert at IVA Partners, believes. “If it is difficult to introduce restrictions against a significant part of Russian oil carriers, then specifically against individual companies, as in the case of Gatik Ship, such measures will be taken, complicating the operational activities of shipowners.”
However, the precedent with the Indian operator may serve as a guideline for other suppliers from the «shadow» fleet of Russia to get out of a similar situation. “Gatik Ship attracted the attention of Western regulators about a year ago,” says economist Andrei Loboda, director of communications at BitRiver. — Literally before our eyes, this seafaring operator has become the largest transporter of «black gold» from our country, capable of transporting more than 30 million barrels in just one total trip. The loss of access to such a powerful resource could deal a painful blow to the supply of our raw materials in the Asian direction.”
However, it is too early to mourn the loss of the Asian market to domestic manufacturers, even due to Gatik Ship's problems. Back in May, the Indian firm decided to put its tankers under the flags of other countries. According to the Vesselfinder navigation portal, several ships of the Indian cargo carrier will now officially belong to a small Mongolian company registered in Gabon, and about two dozen more will receive official registration in the UAE shipping registry.
According to Igor Yushkov, the tactics of relations between Russian and foreign escorts of oil cargoes will be reduced to a minimum documentary contact: sensing the approach of another problem with supplies, shipowners will change the jurisdiction of tankers and outweigh the flags under which ships sail. Western countries realize that they have driven themselves into a difficult situation: they are forced to force a large number of countries and companies to comply with the introduced anti-Russian restrictions, but they do not have enough opportunities to control everyone, and even more so to punish.
So far, such sanctions «leapfrog» works in favor of Russian exports. “All that remains for Russia is to prove that the creation and operation of the “shadow” fleet fit into the existing political and economic model for the development of the state system,” the analyst concludes.