Shadow Fleet for Russia: Oil tankers evade sanctions with fake signals

Shadow Fleet for Russia
Oil tankers evade sanctions with fake signals

By Roland Peters

In a variety of ways, Russia’s oil industry is circumventing Western Alliance sanctions. About a network of companies with a global shadow fleet. Some tankers falsify their position data in order to retain insurance cover.

Ships give position signals. This makes it possible to trace which ports they are entering, which route they have taken, when they are moving or standing still. And sometimes, according to research by The New York Times, tankers transporting Russian oil stand around somewhere in neutral sea zones in Asia for a conspicuously long time. Some perform completely pointless maneuvers. Why? Because the signals are fake, possibly with special software. This was the result of a comparison with other data, such as radio messages and photos.

In February, for example, the oil tanker Cathay Phoenix, west of Japan, broadcast a regular signal simulating movement in circles, over and over. In the end, the course line looked like stenciled geometric art. However, the Cathay Phoenix could not be seen on a satellite image of the relevant area. But in the Russian port of Kosmino, 400 kilometers further north in the Bay of Nakhodka, where the tanker loaded oil, which it then transported to China.

The US Medium pursued during his research six tankers who falsified their signals. Of these, at least three transported Russian crude oil, which they sold in China at higher prices than permitted. The ships hide their true routes to avoid US sanctions and retain their insurance coverage. Globally, this is most likely just a small sample of a variety of evasion tactics, such as clandestine transhipment at sea. More money flows to the state oil companies and into the Russian budget than would be the case if the sanctions were complied with. This in turn has potential implications for the Russian war of aggression in Ukraine.

A billion dollars in tankers

Since December 2022, there has been a $60 price cap for Russian crude oil on the Western market. If buyers pay more, transport may not be insured. According to the International Energy Agency (IEA), Russia’s oil and gas revenues have since officially shrunk from $22.5 billion to $8.1 billion in April. In the same month, Russia exported 8.3 million barrels of oil per day, the highest since its all-out attack on Ukraine. According to the US government and the EU the sanctions are working – they reduce Russian revenues but keep the oil flowing. Both have banned crude oil imports from Russia.

The western alliance has imposed a variety of punitive measures against Moscow and the Russian economy. But despite the financial damage, the International Monetary Fund estimates that it could grow by as much as 0.7 percent this year. According to a calculation by tankertrackers.com, which monitors global maritime traffic, about a billion dollars worth of Russian crude oil is transported by a shadow fleet, which is nevertheless insured in the West.

Russian oil sold to China, as in the cases identified by The New York Times, is perfectly legal and outside the scope of the western alliance’s sanctions. But most of the international shipping is insured in member countries of the alliance, in the case of the six ships tracked with the US company American Club. This means that both the transport company and the insurer are in breach of the penalties. An analyst is quoted as saying that Russia is showing a “pattern of sanctions evasion at sea” when selling its oil on the world market.

Not only oil from Russia

According to the US Treasury Department, insurers must immediately suspend protection if the price cap is exceeded under their cover. “The level of counterfeiting is unusual and sophisticated,” said a former sanctions expert at the ministry. American Club declined to comment on the report, but said it is monitoring compliance.

At least thirteen times the observed tankers pretended to be in the western Sea of ​​Japan using fake position signals, but were docked at Russian shipping terminals and transporting oil to China. Five of the six ships also covered up oil transports from internationally sanctioned Iran or Venezuela with their fake signals. They’re just part of a shadow fleet of different companies that don’t care about Western sanctions. They do their business anyway.

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