Since the introduction of G7 oil price cap for Russia’s crude oil and refined products there have been speculations on Russia’s so-called shadow fleet being used to evade sanctions.
Illustration; Image credit Rosmoport
Russia has repeatedly stated that it will not work with the price cap, but the vast majority of seaborne Russian oil shipments rely on services provided by companies based in the G7. Russia needs to transport its oil output if it wants to maintain current cargo levels, as its current fleet doesn’t have enough capacity. However, it cannot use services in G7 countries due to sanctions controls if it does not conform to the price cap. Therefore, Russia has reportedly created a “shadow” or “ghost” fleet of vessels to transport its oil output while potentially evading G7 sanctions and price caps.
“There are multiple estimates as to how many vessels make up the Russian shadow fleet. While an exact number in the shadow fleet would be difficult to determine, there are certain vessels with particular characteristics and patterns that can be used in an assessment of ships likely to be involved in the transfer or movement of Russian oil,” S&P Global Market Intelligence said in a whitepaper.
The paper estimates that 443 tanker vessels (with a DWT greater than 10,000) are currently operating within the Russian shadow or ghost fleet.
S&P Global Market Intelligence’s whitepaper based its methodology on the following:
Vessels with a current Russian registration or ownership entity since the G7 oil price cap was introduced on Dec. 5, 2022
Vessels making their first port call or STS with Russia after Dec. 5
Vessels previously working Iranian or Venezuelan oil tanker routes but have now switched to Russian cargoes
Vessels sold with missing ownership entities or having an unknown or undisclosed buyer since August 2022 (the G7 oil price cap was announced in September 2022)
According to the whitepaper, the number of vessels with a wider potential for risk in regard to Russian sanctions is estimated to be 1,900. These are vessels of all nationalities and ownership that have made Russian port calls, STS transfers etc. From these 1,900 ships the majority are Greek owned and cover a wide range of flag registries from the Marshall Islands, Liberia and Panama.
Furthermore, new vessels have begun to work the Russian tanker routes. Namely, 35 new vessels have visited Russian oil ports for the first time in the period between Dec. 5, 2022 and Feb. 16, 2023, the report said.
The nationalities of the majority of these vessels are the Marshall Islands, Panama, Liberia and Hong Kong. 63% of these vessels are older than 13 years, with a maximum age of 27. These vessels are making direct journeys and discharging cargo in Egypt, Nigeria, China, and India, the whitepaper shows.
Ceuta on the North African Mediterranean coast has been identified as the current hotspot for Russian oil ship-to-ship (STS) transfers, with a monthly average of 18 between October 2022 and January 2023.
The number of unique vessels conducting STS activity in the Ceuta zone increased from 2 per month in May 2022 to 20 in January 2023. Many Russian-origin vessels have been involved in the STS transfers and there are examples of ships carrying Russian oil products being transferred to multiple vessels, the paper said.
The predominant flag states engaged in this activity in Ceuta are the Marshall Islands, Panama, Cameroon, Belize and Liberia. The pattern of trade around Ceuta follows a particular theme. A tanker loads cargo at a Russian Baltic or Black Sea port, at Ceuta it pairs with another vessel and then the vessel with the transferred cargo sails onwards to destinations such as Brazil, India, China or UAE.
Other STS transfer hubs for Russian oil are the Peloponnese region of Greece and South Korea.
Russian diesel appears to be finding a new home in North Africa with multiple cargo deliveries to Tunisia in 2023. For the first two months of 2023, Russian refined product cargoes delivered to Tunisia have already exceeded volumes in 2022, the whitepaper said.
According to S&P Global, an increasing number of vessels that once worked the Venezuelan oil cargo route and engaged in ‘suspicious activity’ when delivering these shipments are moving over to Russian tanker routes.