Despite the sanctions imposed by the West after the invasion of Ukraine, Russia continues to sell its oil almost without intervention. And it does this thanks to the ‘ghost fleet’ that escapes the radar of international authorities and thus allows the blockades established after the invasion of Ukraine to be bypassed.
sanctions
Before Vladimir Putin invaded Ukraine in February 2022, Moscow’s oil exports relied mostly on Western tankers, which dominated 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 shipping, insuring or financing Russian exports after Dec. 5, 2022, unless the oil is sold at a discount. to market prices.
It was at this point that Russia began to build its own fleet of ships registered in non-G7 countries. In the last months of 2022, there was a boom in the tanker market as Russian companies and intermediaries took action to purchase second-hand ships and Western shipowners seized the opportunity to make golden deals.
Ghost Fleet
As a lengthy investigation by the Financial Times revealed, these fleets were built, but with money from Russia’s Lukoil, thanks to the complicity of Western entrepreneurs who bought the ships and registered them with companies in far-flung places such as the Marshall Islands. Since December 2022, when the first Western restrictions on Russia’s oil exports were introduced, Moscow has created a fleet of more than 400 ‘ghost’ ships that currently carry around 4 million barrels of oil a day out of reach, according to reconstructions by the British newspaper. The enforcement of sanctions generates billions of dollars a year in additional revenue for Vladimir Putin’s war.
Western governments have so far succeeded in discovering and approving individual ships, but the trickery of offshore corporate structures has left Western officials reportedly struggling to determine who owns the tankers, how they were purchased, or who oversees their operations.
Western accomplices
The FT investigation shows how Russia’s Lukoil used its shipping arm to finance the purchase of Canis Power, one of the ships later approved by the West, and at least 24 other second-hand oil tankers, a 74-year-old British accountant called John Ormerod. Between December 2022 and August 2023, the total cost was more than $700 million. Each ship was purchased by a different special purpose vehicle set up by Ormerod in the Marshall Islands, but Lukoil’s Dubai-based Eiger Shipping DMCC provided the funding by pre-paying the ships’ charter, the newspaper reported.
At the same time, contracts were signed to manage the ships with Dubai-based companies linked to Pakistan-born British shipping magnate Muhammad Tahir Lakhani, the FT said, citing sources with knowledge of the facilities. The complex series of deals shows how Lukoil, Russia’s second-largest oil producer, was able to finance the purchase of a fleet of ships by hiding its involvement from the public. The 25 ships have reportedly carried approximately 120 million barrels of oil from Russia since their acquisition by Ormerod. Assuming the cost per barrel is only $60, total exports would still be equivalent to $7.2 billion.
gaps
This trick also works because these transactions don’t actually violate any laws. This is because while Lukoil has been under US sanctions since 2014, neither Eiger Shipping DMCC nor its owner, Dubai-based Litasco Middle East DMCC, are sanctioned entities.
This is completely legal, as Dubai-based companies do not need to comply with Western restrictions if they do not use G7 financing or services. These rules were designed to reduce the Kremlin’s revenue while also allowing Russian exports to continue, at least in part, so as not to cause global oil prices to soar.
Source: Today IT
Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.