It has been called Russia’s “ghost”, “shadow”, or “dark” fleet. Nearly 500 ships, many of them old tankers with murky ownership and obscure insurers, could be playing an integral role in moving Russian crude to China and other ports in Asia, because of a G7 price cap meant to keep foreign-currency oil revenues out of the Kremlin’s hands.
Often the ships use tactics designed to hide their location or the origin of the crude carried from Russian ports, which may later be refined in India and other countries and even re-exported to the western countries sanctioning the Kremlin.
The clandestine tactics include “AIS gaps”, created by switching off a vessel’s automatic identification system transponder; ship-to-ship transfers in international waters away from scrutiny; “flag hopping”, or altering a ship’s country of registration; and “complex ownership and management structures that change each month,” according to Michelle Wiese Bockmann, a senior analyst at Lloyd’s List Intelligence who has reported extensively on Russia’s dark fleet.
Some of the vessels are past their prime and considered unsafe, as in the case of the Pablo, a 27-year-old Gabon-registered tanker that suffered a large explosion off Malaysia in May. According to Le Monde, the ship allegedly has a record of carrying sanctioned Iranian crude, and had probably just delivered Russian oil to a Chinese port before the accident occurred.
Bockmann estimates nearly 12% of the world shipping market is now “dark” and able to exploit regulatory gaps. “If you want to hide in shipping, it’s very, very easy,” she said.
The role of dark ships will become more important after the value of Urals oil rose past a $60-a-barrel price cap. The cap, introduced last December, bars western companies from transporting, servicing or brokering cargoes of Russian crude worth more than that price.
Greek-flagged tankers insured by big companies might have accounted for 50% of port visits before the ban, Bockmann said. Now they make up just a fraction of them, probably because of fears about the cap and because Russia has reduced exports. Vessels less wary of regulation are expected to replace them.
The shift toward dark shipping has been months in the making. “When it was quite obvious that sanctions were coming, the secondhand market for old, clapped-out tankers went bananas,” said Bockmann. “There were hundreds of transactions, and they all joined this dark fleet and started shipping Russian oil.”
The value of a 16- or 17-year-old medium-sized “Aframax” tanker doubled within six months, she said, even though most big oil companies refuse to charter tankers older than 15 years. Gatik Ship Management, a previously unknown firm, spent $1.5bn in about 12 months to acquire a fleet of old vessels that traded exclusively in Russian oil and products. “I’ve never seen it and I’ve looked at this industry for 25 years,” Bockmann said.
A Financial Times report indicated Gatik was likely to be connected to Rosneft, the Russian oil giant.
Last week, Bockmann reported that four successor companies to Gatik had been registered in Turkey.
The dark fleet shows just some of the difficulties in maintaining an energy embargo.
“There are regulatory gaps, and holes and shortcomings that prevent it ever being enforced,” Bockmann said.
“If your tanker is registered in Panama, your single-ship shell company is a brass-plate address in Liberia, your ship manager is in a shopping mall in India, you’ve got lowly paid crew from the Philippines, call at Russia and discharge at China, and use a dodgy P&I [insurance] company that’s based in the Seychelles, where does that bring you to any form of international regulation, despite all the rules and conventions out there?”
