Russia’s New Shadow Fleet of LNG Transport Vessels Mirrors Oil Shadow Fleet That Allows Them to Skirt Sanctions

 Russia’s New Shadow Fleet of LNG Transport Vessels Mirrors Oil Shadow Fleet That Allows Them to Skirt Sanctions

     Russia has sold more gas to Europe in 2024 than in 2023. Russia’s wartime economy is booming. These are some of the headlines I have been seeing. While sanctions have caused some harm to the Russian economy, they are doing what they can to adapt and to fund the war machine. That pisses me off and it should piss you off too. That Putin is mulling selling cruise missiles to the Houthis so they can better target civilian ships is just another bold threat from bad boy Putin. The new bonding of Russia and North Korea and the continued bonding of Russia and Iran really makes the ‘axis of evil’ an apt phrase. There is little to nothing good about these three regimes. The latest sanctions-busting adaptation mirrors the ‘shadow fleet’ or ‘ghost fleet’ of oil tankers by employing a shadow fleet of LNG tankers to sell Russian LNG.

     Ukraine has called for a complete ban on Russian LNG but that is unlikely in practice as several countries buy Russian LNG. Europe just partially banned LNG for the first time:

 

“In its 14th round of sanctions against Moscow, the EU targeted Russia's (LNG) sector for the first time on June 24, forbidding ports being used for transshipment of the fuel to third markets outside the bloc.”

 

The problem is simply that this is not enough. Europe imported more Russian LNG in 2024 than before the war. Some of it is bought and sold elsewhere so that there is some EU profiting but that does not eliminate Russian profits.

     After the G7 imposed a $60 per barrel price cap on seaborne oil, Russia began using its oil tanker ghost fleet to circumvent it. Tanker ownership is obscured to make it hard to know that they are Russian tankers. They are also older tankers and there are environmental concerns with them. Bloomberg reported at the end of June that over the past three months, “a company in Dubai has acquired at least eight vessels, four of which Russia had reportedly allowed to cross Russian Arctic waters this summer.” Thus, it looks like a new LNG shadow fleet is born. Bloomberg noted that the shadow LNG fleet is easier to track compared to the oil fleet because there are far fewer LNG tankers. Bloomberg did note that they did not link the LNG tankers directly to Russia, but all the signs are there that this is an LNG shadow fleet.  

     While it is great that the EU has severely limited pipeline gas from Russia and dispensed with past plans to become even more dependent on Russian pipeline gas. I always say Putin had it made before the war since oil and gas sales at high prices were being bought from everywhere. Even then, he repeatedly used gas and oil as a weapon, especially to intimidate the EU. Total disconnection should be the goal of the EU. Countries like India and China could cripple the Russian economy if they joined in the oil and gas sanctions, but they would rather enjoy the fruits of significantly lower-cost supplies than worry about colluding with a criminal state. According to Newsweek:

“The EU sanctions announced last month forbid new investments and services to complete LNG projects under construction in Russia, specifically targeting Novatek's Arctic LNG 2 and Murmansk LNG projects.”

     Putin obviously plans to win the war in Ukraine like he won in Syria, with relentless attritional warfare and bombing, using his manpower and weapons advantage, disregarding the number of people killed, utilizing more conscripts, and more convicts (if there are any left), more migrants, and more mercenaries from multiple countries.

    In May the Financial Times reported that Europe imported more LNG from Russia than from the U.S. This need not be the case and absolutely should not be the case in the future. This war has been going on for almost 2.5 years. It’s time for the EU to stop supporting Russia. Unfortunately, public sentiment in several EU countries is not as anti-Russia as it should be, with many right-leaning parties and governments still supporting Russia and even some on the right and occasionally on the left here in the U.S. calling for us to end support for Ukraine.

     Putin’s goal of an anti-Western alliance challenging the world order is a joke of course, but one that we can’t seem to put down. As long as we give them leeway, they will do what they can, as criminals do, to survive and prosper.

     Oil commentators note that the oil trade between Russia and China is robust and if the Chinese economy picks back up that will mean even more oil profits for Russia. Sanctions busting is now routine, with Russia, Iran, and Venezuela successfully skirting sanctions. One day there may be a free and democratic Russia which would help solve many global problems, but that day is not today. Meanwhile, human rights backtracking, lack of freedoms, a criminal government, war crimes, arresting foreigners, and brutality are the norm.

 

References:

Putin Finds Loophole to Keep Selling Russian Gas. Brendan Cole. Newsweek. July 2, 2024. Putin Finds Loophole to Keep Selling Russian Gas (msn.com)

The OPEC, Russia, Chinese Quagmire Driving Oil Prices. 24/7 Wall Street. The OPEC, Russia, Chinese Quagmire Driving Oil Prices | Watch (msn.com)