UAE companies acquire old LNG tankers amid rising sanctions concerns

Registered in the United Arab Emirates, unknown companies in the market have suddenly started buying old LNG tankers. They have acquired at least fifty such ships, which has caused a sharp increase in their prices, reports the "Financial Times."

As the British newspaper reported, companies connected to Moscow have started buying dozens of old LNG tankers. The goal is to create a so-called "shadow gas fleet," which would operate similarly to the oil fleet. This fleet would maintain trade in case of sanctions and lessen their impact. In the absence of sanctions, this fleet would allow the expansion of trade. In this way, the Russian government is preparing for sanctions in the LNG trade.

Over the past year in the United Arab Emirates, ownership of over 50 LNG tankers has changed hands, according to information from Winward, which specializes in advising shipowners. Previously, such transactions were rare, notes the British newspaper.

Shipping industry specialists report that some of the purchased LNG tankers operate on routes used to transport gas from Russia. Thanks to tools used to track ships, one of them loads LNG from Yamal, the gas liquefaction plant of Novatek, which manages to bypass sanctions.

The growing demand for older LNG tankers is causing their prices to rise, especially old ships with gas turbines, reports the "Financial Times".

According to specialists, repeating the success of the oil sector, which managed to partially bypass Western sanctions, is unlikely.

- Attempts to create a shadow LNG fleet are doomed to fail - assesses oil and gas market expert Mikhail Krutikhin. - These ships will not be able to fulfill their transportation function and will be boycotted by insurance companies and customers - he adds.

The 14th sanctions package included a ban on the transshipment of Russian LNG in their ports; hence, exporting cargoes from Yamal LNG via the NSR to Asia or Africa requires Arctic-class LNG tankers, which reduces the project's profitability. There are over ten times fewer of these ships in the world than tankers. These are specialized ships, easier to track, explains the expert.

In December 2023, another package of EU sanctions against Russia, including an embargo on importing Russian LPG, came into effect. The sanctions include a one-year transition period. Until December 2024, it is possible to import Russian LPG under previously concluded contracts. The embargo is to be completed after December 20, 2024.