After several successful deliveries of fuel to China, which experts and monitoring groups previously reported, such vessels began to be used more often.

How Russia uses the shadow fleet and how much it helps to avoid sanctions, the journalists of "Ukrainian Energy" learned.

When sanctions are only beneficial

The first sanctions against tankers and related companies of the USA began to be introduced last October, then the EU and Great Britain joined them. Such ships stood on a raid near Russian ports for months (some - up to eight months). But since the end of April, at least 17 tankers have departed from them with cargoes of crude oil or petroleum products, according to Bloomberg, citing ship tracking data.

The process accelerated in August, and in September, judging by the current situation, the number of sanctioned vessels participating in oil exports will be even greater. Now they don't even hide where they are going, indicating China or India as the destination of the flight.

Currently, 11 sanctioned tankers are anchored in the Pacific port of Kozmino, seven near Ust-Luga in the Baltic Sea, three more have been in the Black Sea for several months, and two near Murmansk.

Instead, the US plans to strengthen sanctions against Russian oil. This was announced the other day by Dalip Singh, the US President's deputy adviser on national security. He clarified that the sanctions will affect the shadow fleet of oil tankers, as well as its volumes, which are allowed to be supplied to the market.

I will buy a used tanker

However, Russia does not calm down and is already forming a "shadow fleet" of gas carriers by analogy with the oil "shadow fleet". In fact, we are talking about buying tankers that have worked for 20 years or more - that is, they have practically exhausted their resource. It is assumed that in this way Russian LNG production (liquefied natural gas production - author's note) will be able to compensate for the loss of capacity due to sanctions, and now also due to the sharply complicated relations with South Korea. Previously, South Korea built tankers of this class at its shipyards for the benefit of Russian manufacturers.

Here it is worth understanding that the service life of a tanker, especially a technological one such as a thermos tanker for LNG transportation, does not exceed two dozen years. Then it needs to be disposed of, and this process is not one of the cheap ones, and therefore the cost of transportation is included in the future disposal costs as a separate item.

The owners of worn-out tankers, having received an offer to buy it from Russia, will certainly be happy with such an offer, because they will receive a double profit: firstly, they will have the same ones embedded in the cost of disposal deductions, and secondly, instead of spending on it, they they will also receive a profit from the sale of the tanker and save themselves a headache.

At the same time, it is difficult to say how long the purchased used tanker will last, but its purchase does not look like a commercially profitable deal. Another question arises when it is more profitable to sell at a loss than to stop production. Then the losses will be of a completely different order.

In essence, today Russia's oil and gas producers are not so much making money as they are optimizing their losses, choosing a strategy that will bring them lower costs compared to the rest. There is no need to talk about profit in such conditions.

On paper, a bad state of affairs can be hidden for some time through purely accounting manipulations, but not indefinitely.

Say goodbye to ZGD projects

Today, the Russian mass media reported that our aggressive neighbors began to freeze large LNG projects due to sanctions. Thus, Russia's largest private gas company "Novatek" stopped work on promising projects for the export of liquefied natural gas - "Murmansky LNG" and "Obsky LNG" against the backdrop of Western sanctions. Novatek understands that all future LNG projects of the company will be subject to sanctions. Also, it is still unclear on which site to build ice-class tankers for Arctic projects, how to finance them and how to organize trading. In this situation, Novatek decided to focus on the completion of Arctic LNG-2 and the adjustment of shipments.

"Murmansky LNG", consisting of three lines of 6.8 million tons each, and "Obsky LNG" for 6 million tons were to become the next projects of the company after "Arctic LNG-2". At the same time, "Murmansky ZPG" was considered the most promising, especially in the conditions of sanctions restrictions. This is due to the fact that its location in the port of Murmansk, which does not freeze, eliminated the need for the construction of Arc7 ice-class tankers and made it possible to export LNG on ordinary ships. In addition, the project received power from the energy-surplus Rosatom Kola NPP using electric drives instead of foreign gas turbine equipment.

In turn, "Obsk LNG" was to be implemented in tandem with the Obsk gas-chemical complex (HCC). Development of the latter at "Novatek" continues. However, if earlier it was planned to produce low-carbon ammonia and hydrogen, now the possibility of ammonia production, but without CCS (production of CO2 with injection into the reservoir), as well as urea with further export via the Northern Sea Route to Asia, is being considered.
However, this option is also in great question - the shortage of the fleet is indicated.
Building gas liquefaction facilities is one thing. Taking the gas to the market and delivering it to the buyer is a completely different thing. And here comes the problem of a critical shortage of tanker capacities
The problem is not new and not only Russian. The same Qatar, which has been implementing its LNG program since the mid-2000s, still cannot fully launch it precisely because of the lack of tankers, although it has one of the most powerful tanker fleets, including supertankers of increased cargo capacity. The reason on the surface: it is not possible to build a tanker at every shipyard, there is a similar specialization in South Korea, and it stamps them without laying hands, but it does not have time.
At a time when Russia has set itself against all developed countries, relations with South Korea are, to put it mildly, on the edge. Current contracts are fulfilled, future ones are unclear. And most likely, we will have to forget about them. Russia has its own facilities where tankers are assembled, but the components come from the same South Korea. From Russian, there are probably only cogs, if they do not come from South Korea in a separate bag.
Accordingly, the enthusiastically declared program to take the leading positions in LNG production will suffer the fate of Putin's thousands of planes. At first, they were adjusted to half the amount, now they are figuring out how much they will actually pull. Two or three a year. It is the same with tens and hundreds of millions of tons of LNG. They will cut here, emphasize there, and then say nothing at all. They will find that they can still lie.
Currently, the shortage is such that we are talking about current cargo, because it was assumed that whole caravans of ships would go along the Northern Sea Route. That is, according to the plans of the courts, there should be much more.
Moreover, "deficit" is an understatement, as it is 50% or even a little more. In fact, only half of the transportation capacity is provided. And it won't get any better, since foreign shipyards are closed to Russians, and their own shipyards are unable to solve the problem.
By the way, it is not even about hundreds, but about two dozen ships. Only, but it becomes an impossible task for the "powerful" Russian economy, which sanctions only benefit.
The Shadow Fleet is in the crosshairs
In the meantime, the G7 countries seek to limit Russia's use of a "shadow fleet" of tankers, the British Financial Sanctions Authority said.
Bloomberg notes that the "shadow fleet" includes hundreds of tankers of "mysterious" owners and traders. Its existence allows bypassing the price ceiling for oil and oil products. The measures taken by the G7 include restrictions on the sale of old tankers to unknown owners, studying the maritime and environmental risks of using "shadow fleet" tankers, and imposing sanctions against those who violate country restrictions.
The West will spend the coming months hunting down every tanker even suspected of participating in this fleet. Hunting does not mean that they will be burned - but each of them will be marked and regardless of what flag and name he will walk under at a specific moment in time. Instead, such a vessel will become toxic to everyone who will deal with it and the cargo being transported.
This matter is slow and quite expensive, but it is quite possible. The goal is still the same: the "ceiling", that is, a radical decrease in the revenues of the Russian budget. The costs must be so large that the entire margin will go to intermediate transactions in the trade of goods that fall under the "ceiling".
In fact, this is a soft version of the "Oil for Food" program, which was introduced for Iraq. Yes, this program was not perfect, it was wildly corrupt, but it worked.
In this sense, 2024 will pass under the sign of tightening and tightening of the already adopted sanctions. If new ones are introduced, then they are situational and for urgent reasons. In general, the already accepted ones will be refined.
The joint "call to action" should hit the fleet of about 600 vessels, which the Russian Federation uses to transport about 1.7 million barrels of oil per day, as well as LNG. Therefore, the sanctions, although they work slowly, are very systematic and clear, which is already felt in the Kremlin.

Yuriy ATANOV, specially for "Ukrainian Energy"

Author: Юрій Атанов