European Shipowners' Assistance to Russia's 'Shadow Fleet' to Evade Sanctions

Over the past three years, despite Western sanctions, Russia has purchased at least 230 oil tankers worth more than six billion dollars from shipbuilding companies in the United States and the European Union. These transactions have been facilitated by countries that have not joined Western sanctions against Russia. The 'shadow fleet' or 'ghost fleet' refers to ships that assist Russia, Iran, and some other countries in continuing oil exports secretly and in violation of sanctions. It is estimated that the 'shadow fleet' in Russia consists of about 600 ships, accounting for over 70% of Russia's total oil exports and playing a decisive role in financing Russia's war against Ukraine. Investigative journalists have also concluded that shipbuilding companies are selling old ships to Russia, Iran, and Venezuela for substantial profits instead of scrapping them. There are also suspicions that Russian oil tankers are involved in espionage operations, mapping key Western infrastructure, and sabotaging underwater power and internet lines. It is estimated that since the beginning of the war against Ukraine, Russia has exported over 800 billion euros worth of oil and gas. The Oxford Institute for Energy Studies has also estimated that the profits from hydrocarbon sales account for half of Russia's budget. The 'ghost fleet' dilemma for reviving Trump's 'maximum pressure' against Iran has emerged. Journalists from 13 international publications, as part of the investigative project 'Secrets of the Shadow Fleet' led by the Dutch publication 'Follow the Money' and in collaboration with Kyiv Economic University, have revealed new details about Moscow's efforts to evade sanctions. According to this report, even after the imposition of U.S. and EU sanctions, Russia has purchased cargo and oil tankers from 21 Western countries whose governments support the sanctions. Companies from Germany, Norway, the UK, and especially Greece have profited significantly from selling old and unsafe tankers to Russia. The report suggests that Paris Kasidokostas-Latsis, a 42-year-old Hollywood producer and heir to one of Greece's wealthiest families, is also involved in the cargo ship trade. His company bought two 250-meter oil tankers for about 50 million dollars six years ago and sold them last fall for 84 million dollars to a company based in Vietnam, but within a month, these tankers joined the 'shadow fleet' and are transporting Russian oil. The European Union banned the sale of cargo and oil tankers to Russia at the end of 2023, but selling ships to Russia through third countries is not subject to sanctions. Investigative journalists have analyzed a vast amount of data and concluded that shipbuilding companies have seized the opportunity and instead of scrapping old ships, they sell them for substantial profits to Russia, Iran, and Venezuela. These companies claim they are acting in accordance with the law and have no knowledge of the final buyer. For example, the Belgian company 'Euronaut', which recently changed its name to 'CMB Tech', sold five ships worth 135 million dollars to a company in the Seychelles in 2022 and 2023, claiming they 'could not imagine these ships would become part of Russia's ghost fleet.' David O'Sullivan, who oversees EU sanctions, states that to prevent the completion of the 'shadow fleet', European companies 'are required to inform their governments about the sale of cargo and oil tankers to third countries and prove that they have conducted sufficient inquiries about the purposes of these transactions.' However, investigative journalists say that after these regulations were imposed in 2023, European companies sold at least 32 oil tankers that ended up in Russian hands. A market activist, who wished to remain anonymous, told journalists: 'Financial profit is the biggest incentive, and although traders generally follow the law, when it comes to money versus ethical considerations, they choose money.' The U.S. has sanctioned the 'ghost fleet' network for smuggling Iranian oil. Michel Weiss-Bockman, an analyst at Lloyd's, explains a similar situation: 'If you have an old car you don't want to use, worth at most two thousand euros, but someone offers you four thousand dollars for it, you will sell not only your car but any similar car you can get your hands on. This is exactly what has happened with shipbuilding companies. They have suddenly found an opportunity to get rid of old ships and make substantial profits.' This Lloyd's analyst added: 'The owners of these ships realize that no one other than Russia is currently paying double their value for old ships, but they have turned a blind eye to this. Everyone knows that ships over 15 years old that have been sold for double their price in the last three years are now part of the Russian fleet.' According to investigative journalists, Greek shipbuilding companies have made about four billion dollars, British companies about 600 million dollars, and German companies about 200 million dollars from selling oil tankers to Russia. Meanwhile, Western governments' efforts to sanction the 'shadow fleet' have increased. Last month, the U.S. imposed the toughest sanctions on the Russian oil industry. Under these sanctions, 'Gazprom Neft' and several major oil companies, along with over 180 Russian-owned oil tankers, have been added to the sanctions list; some of these tankers were also involved in transporting Iranian oil. The fifteenth EU sanctions package related to Russia's military aggression against Ukraine has targeted over 50 cargo and oil tankers, along with individuals and entities involved in evading sanctions. It is said that in the new sanctions package, more tankers and related companies will be added to the sanctions list. Meanwhile, according to the investigative project 'Secrets of the Shadow Fleet', Greece, Cyprus, and Malta often obstruct EU initiatives to impose further restrictions on Russia's 'shadow fleet'. According to this report, a total of 235 oil tankers have been sanctioned by the U.S. and 68 by the EU. This action, apart from punishing Russia, is also due to environmental concerns. Russia has been unable to compensate for the consequences of the sinking of two oil tankers in the Black Sea for about two months. Vladimir Putin has called this incident 'the greatest environmental disaster of the current century.' Reports suggest that Russia is using 'Volgoneft' series ships, two of which sank on December 15, 2024, in the Kerch Strait, to transfer oil to the 'shadow fleet' tankers.