A new analysis by Follow the Money and the Organised Crime and Corruption Reporting Project (OCCRP) shows that Western shipowners have earned at least US$6.3 billion selling hundreds of ageing tankers on to shell companies, from where they make their way into Russia's shadow tanker fleet.
These Europe- and US-sold vessels amount to nearly 40 per cent of the Russian shadow fleet, or around 230 ships, Follow the Money and OCCRP found.
The KSE Institute at the Kyiv School of Economics identified the ships in the network, deeming a tanker part of the shadow fleet if it is shipping Russian oil, has an opaque ownership structure, and has no reliable Western oil spill insurance.
Direct sales of oil tankers to Russian entities are prohibited under EU sanctions imposed in 2023. However, indirect sales to companies from countries that are not participating in sanctions are not illegal, opening up a significant loophole in the effort that is supposed to be limiting Russia’s ability to bankroll its ongoing war against Ukraine.
Benjamin Hilgenstock, senior economist at the KSE Institute, said the sanctions effort has not been effective enough if these tankers can ultimately wind up in the shadow fleet.
“You can resell the tanker three times in three weeks,” Hilgenstock said. “The companies that sell tankers know what they have to do to avoid trouble.”
Sellers from EU nations are required to ensure that their ships are not circumventing sanctions, according to David O’Sullivan, the EU’s International Special Envoy for the Implementation of EU Sanctions.
As part of a ban against direct sales to Russian companies, the EU mandated that European shipowners must report to national authorities when they sell a ship to a buyer outside the bloc. Sanctions officials cannot block those transactions, but the regulation is intended to make companies stop and reflect before making sales that could circumvent sanctions, O’Sullivan said.
”People selling vessels have to notify, and they have to prove, that they have checked the vessel does not undercut the sanctions or the price cap,” O'Sullivan said. Although “there's always going to be a degree of circumvention,” ge said the question is whether the sanctions are “slowly but surely making it harder, making it more expensive, making it more complicated, for the Russians to continue their economic activity.”
Despite the rules in place, more than half of the tankers identified in the Follow The Money and OCCRP investigation were sold by 54 Greek-operated companies for a total of at least US$3.7 billion.
Although shipowners operating from Greece have sold the most ships that the KSE Institute identified as being part of the shadow fleet, vessels were also sourced from several other EU countries. In particular, Chemikalien Seetransporte, a shipping company based in Hamburg, sold at least five tankers in the group of ships identified by KSE, while the Belgian marine transport company Euronav earned US$135 million by selling five vessels in 2022 and 2023 that also wound up in this group.
A spokesperson for Chemikalien Seetransporte said that while the tankers had previously been managed by their company, they were sold in 2023 and 2024 after “comprehensive due diligence reviews of the respective buyers were conducted by all parties involved, following strict compliance procedures.”
The spokesperson added that Chemikalien Seetransport “has always conducted, is conducting, and will continue to conduct its global operations in full compliance with international laws and regulations. The company adheres to all current sanctions imposed by the EU, the USA, and the United Nations and will continue to do so in the future.”
Euronav spokesperson Katrien Hennin said the company did not know that its former vessels would be added to Russia’s shadow fleet.
“We have no insight into what happens to the ships after the sale and that is not our responsibility,” Hennin said. “To whom the buyer resells a ship or how he operates the ship legally or illegally is beyond our control.”
The sales by Western companies are not in violation of EU, US, or UK sanctions because the vessels are sold to firms registered in jurisdictions that are not part of the sanctions effort, such as India, Vietnam, Hong Kong, or the Seychelles, before ending up operating as part of the shadow fleet. In several cases identified by OCCRP, the ships were also sold a second or third time through a different country before arriving in the shadow fleet.
In response to a question of whether additional ships will be sanctioned, European Commission spokesman Olof Gill said the EU “has made public that the shadow fleet will be actively countered, including via additional designations of vessels.”