Russia's Attempt to Circumvent Western Sanctions

Russia seems to be trying to bypass Western sanctions on its Liquid Natural Gas (LNG) tanker fleet by transferring vessel ownership to a newly formed company based in a free trade zone in Dubai, according to a report by Bloomberg.

Transfer of Ownership to Dubai-Based Firm

Three LNG tankers, which were previously managed by Russian companies Gazprom and Sovcomflot, are now owned by a Dubai-based firm. The vessels, named Velikiy Novgorod, Pskov, and La Perouse, had aspects of their management transferred to Matias Ship Management, the recently established Dubai company, in September, as reported by Bloomberg, citing the global shipping database Equasis. Matias Ship Management's registered address is at the Meydan Hotel in Dubai, a free trade zone. Other companies suspected of assisting Russia in building its covert fleet of oil and LNG tankers are also based in this location, according to Bloomberg.

Current Status of the Tankers

The three LNG tankers have been operating at the smaller Portovaya LNG export plant on Russia's Baltic Sea. This plant is not subject to Western sanctions or export restrictions. Two of the tankers, Velikiy Novgorod and La Perouse, are currently under UK sanctions. Velikiy Novgorod was hit with sanctions recently as the UK imposed its largest round of sanctions against Russia's covert fleet to date. The UK designated an additional 18 oil tankers and four LNG tankers in an effort to cut critical revenues for Vladimir Putin.

Russia's Shadow Fleet

Russia has begun to accumulate a covert fleet of tankers to transport its LNG, using vessel ownership transfers similar to those initiated by Moscow after the invasion of Ukraine. This strategy is designed to create a shadow fleet to export oil and products despite Western sanctions. Some tankers have recently left the sanctioned Arctic LNG 2 terminal in northern Russia, indicating Moscow's ongoing efforts to bypass Western restrictions. In August, the U.S. State Department intensified its efforts to disrupt Russia's Arctic LNG 2 exports by targeting companies involved in the project's development and vessels found to have loaded LNG from the facility.

Bottom Line

The ongoing geopolitical tensions and sanctions are leading to complex maneuvers in the global energy sector. Russia's apparent strategy to circumvent sanctions through the transfer of vessel ownership to a Dubai-based company is a testament to the intricate dynamics at play. What are your thoughts on this development? Do you think such strategies can effectively bypass sanctions? Share this article with your friends and let's get the conversation started. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.