Western firms cash in on shadow fleet aiding Russian oil trade
Western companies have profited in the billions of euros by selling old, rusty tankers to the so-called shadow fleet, which transports Russian oil. This practice circumvents Western sanctions and helps fund Russia's war in Ukraine, according to an investigation by the Dutch portal Follow the Money.
A rusty tanker docked at the Port of Rotterdam on October 27, 2023. The ship, 184 metres long, was called "Chemtrans Uranus" and sailed under the German flag. Dozens of similar tankers load and unload oil products daily at this busy port in the Netherlands, the portal noted in a report published on Tuesday.
A few days later, the tanker left Rotterdam under a new name—"Coast Buster." Instead of the German flag, the blue-white-red flag of the African state of Liberia was flying at its stern. "Coast Buster" set course for the Port of Murmansk in Russia.
Soon afterwards, two other tankers owned by German firms underwent similar transformations in the same port. Upon arrival in Rotterdam, all were managed by the Hamburg shipping company Chemikalien Seetransport. By the time they set course for Russia, they were already owned by Rhine Marine Services. Despite the German-sounding name, the company is based in Mumbai, India.
Where does Russia get the "shadow fleet" from?
The three tankers were sold for $54 million (CAD 75 million). The European Union has banned the direct sale of ships to Russian firms, so they are purchased by companies registered in countries like India, Seychelles, Hong Kong, or Vietnam. This practice is legal in these situations.
According to Benjamin Hilgenstock, chief economist at the Kyiv School of Economics research institute, although the ships are not owned by Russia or Russian companies, there is no doubt about who is behind the mysterious third-country buyers. "It can be safely assumed that the buyers come from Russia and that Russian interests are behind these companies," he said.
Journalists from Follow the Money believe the three tankers are currently part of the Russian "shadow fleet." This fleet includes over 600 ships registered in countries worldwide, transporting Russian oil through opaque ownership structures—and without proper insurance in case of environmental disasters.
The Kremlin uses these ships to circumvent sanctions on oil sales imposed by the West, including the European Union. Russia sells oil at prices above the cap set by Western countries in 2022, providing the Russian state with additional billions of dollars in revenue, which it allocates to funding the war in Ukraine.
Follow the Money: Who profited from the old ships in the shadow fleet?
According to the Follow the Money investigation, over one-third of the shadow fleet (230 ships), mostly old and worn-out tankers, previously belonged to owners from Western countries. The owners sold them at exceptionally high prices. Ships that would otherwise have been scrapped have since 2022, when the war in Ukraine began, generated over $6 (CAD 8.6) billion in profits.
Despite recent expansions of sanctions against this trade, little was done in the past to prevent the sale of old tankers to the "shadow fleet." Europe is now experiencing the consequences: the war continues, obsolete ships are used for espionage and sabotage, and environmental disasters loom, the article reports.
The Kyiv School of Economics has published a list of all suspicious tankers used to transport Russian oil. In the study, Follow the Money and its media partners analyzed information about shipping routes and tanker prices from marine brokers' reports. Interviews were also conducted with dozens of experts and industry insiders.
At the end of 2022, the G7 countries introduced a price cap on Russian oil. The idea was to limit Russia's income as it could no longer sell oil and petroleum products above this price.
Follow the Money is conducting an investigative project on the shadow fleet in collaboration with 13 other editorial teams and 40 journalists worldwide.
