Russian shipping firm ‘evading sanctions by renaming ships and turning off transponders’


Russian state-backed shipping firm ‘is evading sanctions and still delivering oil to Europe by renaming its vessels and turning off transponders’

  • Russian tankers still delivering oil to European ports even as sanctions in place 
  • Russian-backed firm Sovcomflot has 18 tankers each carrying $240m of fuel
  • Report says they turn off transponders and rename ships to evade sanctions 
  • Ships have been tracked from ports in Italy, Denmark, and the Netherlands
  • Ownership of the tankers are registered to subsidiary companies based in Cyprus and the United Arab Emirates and they sail under a Liberian flag 

Russian tankers are still delivering oil to European ports and providing Moscow with much-needed hard currency even after sanctions have come into effect, a report has found.

Russia’s largest shipping company, Sovcomflot, was sanctioned by the US and the EU in February, but an analysis of company records and live ship tracking by the Organised Crime and Corruption Reporting Project shows crude oil deliveries are continuing.

More than 18 Sovcomflot oil tankers have been steaming across the world’s oceans  and shipping lanes in the last month, each laden with an average payload worth $240million.

In order to circumvent western sanctions, some of these ships turned off their transponders, vanishing from real time marine traffic tracking websites.

Others renamed themselves in an effort to disguise their Russian ownership, with one tanker which did not switch off its transponder suddenly changing course from the US and heading to South Africa, where it quickly changed names.

At least five other Sovcomflot ships have been tracked recently coming from, en route to or in docks in Italy, Denmark, and the Netherlands, even after EU sanctions came into full effect.

It is not clear who is buying the sanctioned oil once it has been delivered to these EU ports.

Pictured: A Russian oil/chemical tanker at sea outside the far eastern city of Vladivostok. More than 18 Sovcomflot oil tankers have been steaming across the world's oceans and shipping lanes in the last month, each laden with an average payload worth $240million

Pictured: A Russian oil/chemical tanker at sea outside the far eastern city of Vladivostok. More than 18 Sovcomflot oil tankers have been steaming across the world’s oceans and shipping lanes in the last month, each laden with an average payload worth $240million

Russia's largest shipping company, Sovcomflot, has been sanctioned by the US and the EU, but an analysis of company records and live ship tracking shows crude oil deliveries are continuing

Russia’s largest shipping company, Sovcomflot, has been sanctioned by the US and the EU, but an analysis of company records and live ship tracking shows crude oil deliveries are continuing

Ownership of the tankers is registered to subsidiary companies based in Cyprus and the United Arab Emirates and they sail under a Liberian flag, the country with former Fifa World Player of the Year George Weah as president.

This opaque and complex ownership structure allows Sovcomflot and operators at these ports to avoid triggering sanctions, although the subsidiary that directly owns the vessels – which is based in the UAE as well – is owned by the Russian state.

The EU has been contacted for comment on the matter. 

Professor Ricardo Soares, a specialist in international politics and financing based at Oxford University, said that by appearing to be based in the UAE and renaming its fleet, Sovcomflot was able to continue earning foreign currency that Russia desperately needs to fund its invasion of Ukraine. 

‘It’s almost impossible to track the ownership back to Russia, especially as Sovcomflot is switching ship names and apparently turning off GPS tracking in certain countries,’ said Soares, who added that sailing ships under Liberia’s flag was a straightforward way to disguise the tankers’ origin.

‘Liberia is a maritime tax haven and is used as a flag of convenience for vessels’ he said. ‘It’s as easy as setting up a post box.’

Sovcomflot’s use of different bases and sailing flags mirrors a broader Russian effort to mitigate or evade the implications of western sanctions, said a tax expert.

Pictured: Liberian students parade during a parade to mark National Flag Day. 'Liberia is a maritime tax haven and is used as a flag of convenience for vessels' Professor Ricardo Soares said. 'It's as easy as setting up a post box'

Pictured: Liberian students parade during a parade to mark National Flag Day. ‘Liberia is a maritime tax haven and is used as a flag of convenience for vessels’ Professor Ricardo Soares said. ‘It’s as easy as setting up a post box’

‘Russia’s use of secrecy jurisdictions with which it has no genuine economic ties is a game of hide and seek,’ said John Christensen, an economist and founder of the Tax Justice Network. 

‘By layering its energy shipping business in three jurisdictions that work together — the UAE, Cyprus and Liberia — Sovcomflot circumvented sanctions.’

The sanctions are forcing maritime insurance companies to evaluate whether they are in compliance with U.S. and EU restrictions on business with Sovcomflot. 

In late April, the industry publication Shipping Watch reported that Norwegian insurance giant Skuld had moved to end its underwriting of Sovcomflot, a major client, and booted a Sovcomflot director from its board of directors. 

Sanction-busting within international shipping is becoming a greater and greater endeavour, as the US employs trade sanctions against an increasing number of geopolitical foes and those countries seek to find ways to keep the economic lifelines alive. 

Russian efforts to evade sanctions and continue earning hard currency on crude oil exports come with the asterisk that their greatest and most lucrative export – natural gas – is exempt from EU sanctions.

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