Russian oil still flows to Europe via waters off Greece

The West has sanctioned Russia for its invasion of Ukraine, but Russian oil continues to flow to Europe via hidden shipping routes.

A Nikkei analysis has revealed that in the six months since the start of the Russian invasion of Ukraine, 41 ships carried out ship-to-ship oil transfers off the coast of Greece with tankers leaving Russia and then arrived in European ports. There was only one such ship last year.

The European Union and the United Kingdom will completely ban imports of Russian oil towards the end of the year, but companies that buy Russian oil are already facing criticism. The transfer of oil between ships at sea to hide its origin may continue even after the entry into force of the oil embargo.

On August 24, Nikkei photographed the transfer of oil from one tanker to another in the Laconian Gulf near southern Greece. One of the tankers was the Greek-registered Sea Falcon, which left the port of Ust-Luga, an oil terminal in northwest Russia, on August 4. The other was the Indian-flagged Jag Lok, which sailed from the Turkish port of Aliaga. August 4. Small boats surrounded the tankers, assisting in the transfer.

“There is a major risk of accidents resulting in oil spills in the sea. Exhaust fumes and waste emitted by tankers are also a problem, causing problems for both the fishing and tourism industries. said local resident Thalis Ladakakis, 55. The 55-year-old said the number of tankers had increased since Russia’s invasion of Ukraine began on February 24.

Where is the oil going? To examine Russian oil shipping, Nikkei used data from British data firm Refinitiv to see where tankers leaving Russian ports from February 24 went and which vessels contacted them.

The investigation focused on the waters off the Mediterranean coast of Greece, where ship-to-ship transfers frequently take place. The vessels’ Automatic Identification System (AIS) signals were tracked to identify their routes. Changes in ships’ draft – the distance between the waterline and the bottom of the hull, which increases when a ship is heavily loaded – were also checked to determine the number of ship-to-ship transfers.

In the six months to August 22, Nikkei confirmed 175 transfers off the coast of Greece involving tankers from Russia. There were only nine such transfers in the same period last year. Refinitiv data shows that Russia exported 23.86 million barrels of oil for ship-to-ship transfers off Greece. During the same period last year, 4.34 million barrels were shipped for similar transfers.

The question is where did the tankers who received the oil go after taking their loads.

Nikkei tracked ship routes, confirming 89 tankers arrived at ports, while only three such calls were made last year. Of these, 41 arrived at ports in Greece, Belgium and elsewhere in Europe. Only one tanker did so last year. Two tankers called at Britain, which is a strong supporter of economic sanctions against Russia. The investigation highlighted the crucial role the waters near Greece play as a hub for oil shipments between Russia and Europe.

The EU will completely ban imports of Russian oil by sea from February 2023, while the UK will impose a full embargo on Russian oil in December. According to the International Energy Agency, Russian oil exports to the EU in July totaled 2.8 million barrels per day, down 26% from January. While buying Russian oil remains legal, companies are reviewing their relationship with Russia as governments and markets scrutinize them.

Nikkei also analyzed oil shipments that arrived in Britain in June. Using the route and draft data from Refinitiv, as well as satellite imagery from the US company Planet Labs, Nikkei discovered that a Maltese-flagged tanker which carried oil off the Greek coast from two tankers who left Russian ports arrived at Immingham in eastern Britain on June 4.

Records from European energy research firm Kpler show the tanker was carrying 300,000 barrels of oil produced by Russian oil producer Rosneft. Swiss-based commodities trading house Trafigura traded the oil and sold it to Prax Group, a mid-sized British oil wholesaler.

Nikkei visited the group’s headquarters in Britain and requested information about the transaction. The company responded by saying, “Prax Lindsey Oil Refinery cannot comment on operationally sensitive information about individual shipments. We are working closely with the UK Government and can confirm that we are in full compliance with all applicable sanctions. »

In response to an email query, Trafigura said: “We are engaging openly and regularly with our customers and relevant governments to understand their requirements and ensure we are delivering equipment that meets those requirements.” Rosneft did not respond to a request for comment.

Ship-to-ship oil transfers are quite common. These transfers are sometimes used to consolidate oil shipments into larger tankers, thereby improving efficiency on long distance routes. Oil sometimes changes hands after a tanker leaves port. In these cases, it becomes more difficult to identify where the oil is coming from.

Countries require importers to report the place of origin of their shipment to customs authorities. But Yutaka Tsurusaki, a Japanese lawyer familiar with maritime law, said: “Some companies mistakenly give the place of a ship-to-ship transfer as the place of origin to hide where the oil comes from.”

“The flow of oil must be monitored by port authorities, even if it is repeatedly transferred from ship to ship. They will need to have an unprecedented level of experience and knowledge,” said Michelle Wiese Bockmann, analyst at Lloyd’s List Intelligence.

Julien Mathonnière, Oil Market Economist at Energy Intelligence Group, said: “If you mix different oils via ship-to-ship [transfers], no one can trace the origin. You can hide the origin and continue to sell Russian oil, while mixing it with other oils. In its 2020 guidelines for shipping companies, the US State Department urged them to beware of deceptive practices, saying that “Ship-to-Ship Transfers (STS) are frequently used to evade sanctions by concealing the origin or destination of surreptitiously transferred oil. , coal and other materials.

The Greek Ministry of Navigation and Island Policy told Nikkei: “Ship-to-ship transfers, which take place in international waters, are monitored in real time by local port authorities via the AIS system. In the event of an infringement, such as the entry of vessels into Greek territorial waters, the procedure for the imposition of criminal sanctions is initiated. »

Territorial waters in eastern Greece extend 6 nautical miles (about 11 km) from the coastline, half the usual distance, due to strained relations with Turkey. The ministry says ship-to-ship transfer points in the peaceful Laconian Gulf are “outside its territorial waters”.

The government is ignoring local concerns, arguing that oil transfers are taking place outside its jurisdiction. Stavros Arahovitis, a member of the Greek parliament whose constituency is close to the gulf, complains: “The government might not act until an accident happens, even if I propose to close the Laconian gulf to the parliament.

The financial and political might of Greece’s large shipping industry may help explain the government’s slow response.

The UK and EU will stop importing Russian oil in December and February, respectively, and wealthy Group of Seven democracies plan to set a price cap and restrict its distribution. Russia can be expected to respond by selling oil at a discount and increasing its exports to Asia and other countries.

The West imposed sanctions to cut off Russia’s sources of funding. But if Russian oil continues to flow, the effect of sanctions will be limited. Those hoping to encourage Moscow to change its course in Ukraine will need to detect and crack down on oil deals that seek to circumvent restrictions.
Source: Nikki

Previous This toolkit helps you convert leads into customers
Next Why Ukraine's Donbass Region Matters to Putin: QuickTake