European ships continue to export millions of tonnes of Russian fossil fuels, providing critical cash for Moscow’s war against Ukraine.
The EU imposed an embargo on Russian oil shipments on December 5. The penalties were intended to reduce income while discouraging European shippers from transporting fossil fuels to the rest of the globe.
One month later, Investigate Europe and Reporters United analysis revealed that the measure had had little impact: Moscow continues to profit significantly from exports, while European corporations continue to assist much of the business.
Following the implementation of the new restrictions, European oil, gas, and coal tankers undertook hundreds of journeys with a capacity of about 16 million deadweight tonnes. This represents 40% of the DWT of all ship departures. Over 100 of these shipments departed to Europe, the EUobserver reported.
High-profile Greek shipowners continue to dominate the sector. At the same time, ships from Germany, Monaco, Cyprus, Denmark, Italy, Norway, and the United Kingdom have all exported in the last month. The investigation under the Fuelling war series found that Russia’s sanctioned state company Sovcomflot continues to assist European transactions through its links to an organization in the United Arab Emirates.
European trade with Russia persists
The December sanctions include an embargo on seaborne crude oil going to the EU. EU boats, insurers, and others who facilitate trades are prohibited from shipping crude oil overseas unless it is acquired under a price cap imposed by the West. In August, the EU restricted Russian coal imports.
Despite the measures, many European companies continue to profit from exporting fossil resources from the Russian Federation. There is no evidence that the transactions are unlawful. Still, Europe’s continued economic connections with Russia contributed millions of euros to the Kremlin’s war budget.
689 fossil fuel shipments left Russian ports between December 5 and January 5. Data from the Centre for Research on Energy and Clean Air and Equasis show that 250 of the trips were made by European tankers. European insurers covered the majority of them.
Greek oil shipping magnates
Greek companies were responsible for 161 tanker deals totaling 12 million DWT, accounting for one-third of the total ship capacity of all exports.
TMS Tankers, owned by millionaire art donor George Economou, completed 11 journeys on ships weighing more than one million DWT. Meanwhile, Minerva Marine, commanded by Andreas Martinos, launched 13 missions from Russia with a 1.2 million DWT ship capacity. Others include a trio who run significant media outlets in Greece and are all vehemently opposed to the invasion.
After December 5, Avin International, controlled by Vardis Vardinoyannis, owner of two of Greece’s six private TV stations, transported crude oil on ships carrying 270,000 DWT. On January 3, a corporation belonging to Ioannis Alafouzos, owner of the SKAI network, left Russia with a natural oil cargo intended for Turkey.
Alafouzos expressed horror at the “atrocities committed against the innocent people of Ukraine” and criticized “the Russian government’s invasion.” Alafouzos sued a Greek member of parliament who had accused the shipowner of “hypocrisy” on this topic.
Capital Ship Management, managed by Evangelos Marinakis, owner of the Mega television network, had departed Russia four days earlier with thousands of tonnes of crude oil bound for an unknown destination.
European ships’ trips to Russia
German ships with a capacity of about 1 million DWT left Russia 20 times after the restrictions were imposed. No crude oil trades are reported, but the analysis shows that 15 shipments of undefined oil products are bound for the EU. This is not currently illegal. However, such transactions are expected to be restricted as a gasoline embargo and price cap take effect in February.
European officials must determine whether sanctions have been broken or if these companies are participating in illicit practices by collaborating with Russia.
Between the start of the Ukrainian incursion on February 24 and January 5, European ships transported half of all seaborne fossil fuel supplies by DWT from Russia. Greek companies have completed almost 1600 trips on ships weighing 136 million DWT, accounting for 35% of the total global total of 395 million DWT.
Such trades are permitted under sanctions if the crude oil originates elsewhere and is exclusively transported from Russia. The ports of Novorossiysk and Ust’-Luga receive a significant amount of crude oil from Kazakhstan, and 23 of the 30 trades mentioned for the EU depart from these ports.
The Novorossiysk terminal is part of the Caspian Pipeline Consortium, which delivers oil from Kazakhstan via its pipeline to the Black Sea port. According to the CPC official data, this terminal is part-owned by the Russian state Transneft, which has a 24% stake in the project.
Russia is reportedly amassing a “shadow fleet” of tankers that can transport oil and remain untouched by the sanctions. Russian enterprise Sovcomflot is under international sanctions. To keep transporting fossil fuels to the EU, the Russian company has moved the management of dozens of its ships to a firm registered in the UAE.
Investigate Europe discovered Sun Ship Management, whose directors include Sovcomflot executives according to Dubai’s financial registry, carried out 39 trips after December 5 on tankers with 3.2 million DWT. These included seven EU-related exports, four oil shipments to Greece, and one each to Belgium, Spain, and Poland.
Russia now relies primarily on non-sanctioned markets for its energy exports since the amount of cargo bound for Europe decreased in 2022. This occurred as a result of Western actions aimed at the sector, as well as moves against Russian individuals and financial institutions. However, global export volumes remained consistent as China, India, and Turkey emerged as new import markets. Although, because of the industry’s opaque structure, there is still some doubt about the eventual destination of some deals in the data.
Sanctions are starting to have an impact on the Russian economy. Oil and gas sales account for 40% of Russia’s budget. Still, a mixture of the EU embargo and price restriction, as well as a significant decline in global prices, caused its December revenues to fall to levels seen in February 2022.
However, Russia still earns a lot of money from its exports. However, the international community must do more to end Russia’s war in Ukraine. One core problem with the price cap is the need for big buyers in China, India, and Turkey. The third issue is to prohibit all means of sanction evasion and to punish those who engage in such schemes.