EU’s new wave of sanctions targets Russia’s Middle East shipping company


Home LNG EU’s new wave of sanctions targets Russia’s Middle East shipping company

The EU has adopted a new package of sanctions against Russia and its supporters in response to Russia’s invasion of Ukraine. The tenth package of sanctions is being adopted as the world marks one year since Russia’s full-scale invasion of Ukraine and is targeting 121 entities and individuals.

CC-BY-4.0: © European Union 2020 – Source: EP

The package contains new listings and trade and financial sanctions, including further export bans worth more than €11 billion, with the aim of depriving the Russian economy of critical revenue streams to finance the war.

The sanctions are targeting, inter alia, a third-country shipping company, suspected of helping Russia circumvent sanctions on oil exports.

The company is Sun Ship Management, a Dubai-based subsidiary of Russia’s state-owned shipping giant Sovcomflot, which manages dozens of oil tankers that ship Russian oil and natural gas across the globe.

Sovcomflot transferred the management of 92 tankers and LNG carriers to the company back in April 2022. The EU said that since the start of Russia’s war against Ukraine, Sun Ship Management has been operating as one of the key companies managing and operating the maritime transport of Russian oil. The services have been described as a substantial source of revenue for the government of the Russian Federation, accounting for 70% of Russia’s energy revenue.

The Russian National Reinsurance Company, which is in charge of reinsuring the country’s ships, including the Sovcomflot’s fleet, is also included in the list. The EU said that the service has enabled Russia to deflect the impact of sanctions on its oil trade.

Atomflot, a Russian company that maintains Russia’s icebreaker fleet has also been included in the sanctions. The reasoning behind the blacklisting has been the role of the icebreaker fleet in enabling the Northern Sea Route to become an alternative route for the shipping of Russia’s hydrocarbons between Europe and Asia and avoiding Western sanctions while providing a revenue stream to the Russian government.

The sanctions also include key decision makers on Russia’s political and institutional level, military leaders and two military commanders of the Wagner group, individuals responsible for the deportation and forced adoption of Ukrainian children, as well as Iranian individuals involved in the elaboration and supply of drones.

Three Russian banks have been added to the list of entities subject to the asset freeze and the prohibition to make funds and economic resources available, namely Alfabank, Rosbank and Tinkoff Bank.

The EU has closed its ports to Russia’s entire merchant fleet of over 2,800 vessels. However, the measure does not affect vessels carrying energy, pharmaceutical, medical, agricultural and food products, humanitarian aid, coal and nuclear fuel and other goods necessary for the functioning of civil nuclear capabilities.

The EU said that the ban will also apply to vessels that try to evade the sanctions by changing their Russian flag or registration to that of another state. Port authorities can identify an attempt to reflag or change registration by checking a vessel’s IMO number.

In addition, the EU has prohibited the maritime transport of Russian crude oil (from 5 December 2022) and petroleum products (from 5 February 2023) to third countries. It has also prohibited the related provision of technical assistance, brokering services or financing or financial aid.

Meanwhile, Ukraine is launching a $500 million marine insurance fund intended for civilian vessels that might suffer damages while entering Ukraine’s ports. The country’s Deputy Prime Minister Oleksandr Kubrakov announced the move on its official Twitter account, adding that the goal is to resume delivery of products into the country and expand their portfolio.

The decision is believed to be linked to the potential blockage of the Black Sea Grain initiative aiming to facilitate the transport of grain and foodstuffs from Ukrainian ports.

Under the initiative, Ukrainian vessels guide cargo ships into international waters of the Black Sea, avoiding mined areas. The vessels then proceed towards Istanbul along the agreed maritime humanitarian corridor. Ships heading to and from the Ukrainian ports are inspected by JCC teams comprised of Russian, Turkish, Ukrainian, and UN inspectors.

ENB Top News
Energy Dashboard
ENB Podcast
ENB Substack