Russia's Ghost Fleet In Focus As West Sanctions Key Oil Sector

Since Russia invaded Ukraine in February 2022, the number of oil tankers with opaque ownership or without proper insurance has soared, enabling Moscow to keep on exporting its crude.

10 Jan 2025, 18:20 · www.ndtv.com

London:

Russia's shadow, or ghost, fleet was back in focus Friday after the country was hit by Western sanctions on its key oil sector.

Since Russia invaded Ukraine in February 2022, the number of oil tankers with opaque ownership or without proper insurance has soared, enabling Moscow to keep on exporting its crude.

The United States and Britain on Friday announced sanctions against Russia's energy sector, including oil giant Gazprom Neft.

The US designated more than 180 ships as well as Russian oil majors Gazprom Neft and Surgutneftegas as subject to sanctions.

The UK also announced sanctions against the two companies.

"Western governments' efforts to reduce the shadow fleet through sanctions on individual vessels have only been marginally effective," US think tank Atlantic Council said in a December report.

What is a ghost fleet?

The Kyiv School of Economics (KSE) defines a ghost fleet as commercial vessels that are neither owned by countries in the G7 coalition with the European Union, or that do not use protection and indemnity (P&I) insurance.

Such ships, also called "dark fleets", are used additionally by Iran and Venezuela as a way of getting round US sanctions.

Since Russia's invasion of Ukraine nearly three years ago, "the shadow fleet -- which previously mostly transported goods to and from Iran and Venezuela -- has exploded in size", according to the Atlantic Council.

It estimates that around 17 percent of all oil tankers currently belong to the shadow fleet, which also comprises other merchant vessels.

KSE on Friday noted that in November, Russian oil export revenues dropped $1.1 billion to $14.6 billion on lower prices and export volumes.

At the same time, "greater coordination between jurisdictions is needed to strengthen sanctions enforcement and close loopholes, making it harder for Russia to sustain shadow fleet operations", it added.

Ghost fleet risks?

Prior to Friday's events, Russia had been slapped with an oil embargo, a price cap on its crude and a ban on providing services to ship oil by sea to stop it financing its war with Ukraine.

To get around them, Moscow has had to reduce its dependence on Western maritime services by buying tankers and providing its own insurance.

None of the ships in the Russian ghost fleet has adequate P&I insurance -- a must for commercial vessels to cover risks from war, collisions or environmental damage such as oil spills.

Up to 95 percent of the P&I insurance market is made of insurers from the European Union and the UK, both of which have slapped several rounds of sanctions on Russia since the start of the war.

For the Atlantic Council, the shadow fleet is a non-military but powerful weapon because Ukraine backers would pay the price in the event of an accident at sea with a Western ship, or an oil spill.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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