British accountant aids Russian oil exports amid sanctions loopholes

The shadow fleet, also known as the "phantom fleet," enables Russia to export approximately 4 million barrels of oil, circumventing Western sanctions. This generates revenues of several billion dollars annually, which finance its conflict in Ukraine, as reported by the British daily in its Thursday edition. Since 2022, the Russians have spent over $10 billion on such vessels.

Moreover, the likelihood of an oil spill from these outdated tankers, leading to a catastrophe, is notably high, assessed interviewees of the "FT."

John Ormerod, aged 74, was instrumental in helping Moscow assemble a fleet of old and worn-out tankers. From December 2022 to August 2023, he spent over $700 million purchasing these ships. Each vessel was acquired by a distinct company registered in the Marshall Islands, and the transactions were financed by Dubai-based Eiger Shipping DMCC, owned by Lukoil.

The British shipping broker Braemar, a major player in the sector, facilitated at least nine such transactions.

The management of the tankers was entrusted to additional companies registered in the United Arab Emirates, owned by the shipping magnate Muhammad Tahir Lakhani, a Pakistani who holds British citizenship.

Companies based in Dubai are not required to comply with Western sanctions, provided they do not receive funding from G7 countries, explains the "FT."

Determining the actual buyer of the tankers was complicated because the shell company acquiring a ship was wholly owned by another company, which was in turn owned by yet another, and so on, with Ormerod at the very end of this chain. The acquired tankers sailed under the flag of the Cook Islands.

All these complex manoeuvres were designed to conceal that the transactions were conducted on Lukoil's behalf. The tankers are at Russia's disposal, and Russian banks finance the purchases, clarified Craig Kennedy, an expert on Russian oil and tankers from Harvard University.

In a conservative estimate, assuming the price of oil was $60 per barrel, the tankers purchased by Ormerod transported 120 million barrels of oil, earning Russia about $7.2 billion, calculated the newspaper.

Western companies contemplate scrapping tankers after 15 years of use due to significant wear and potential repair costs. Benjamin Hilgenstock, an expert on oil sanctions, noted that the average age of ships in the Russian shadow fleet is 18 years, and it is unlikely they could be insured against an oil spill.

The shadow tankers carrying Russian oil pass numerous times daily through European waters, including the Baltic and Mediterranean Seas (...). Several incidents have already occurred, and a significant disaster is just a matter of time, added Hilgenstock.

In December 2022, EU restrictions were enforced prohibiting the import of oil by sea and implementing a global price cap for Russian oil at $60 per barrel, agreed upon by the EU and the G7.

It was anticipated that such measures would cut Russia off from a large portion of the world’s tanker fleet, as insurers like Lloyd's of London cannot insure ships carrying Russian oil due to sanctions, regardless of their destination, unless it is sold under the price cap programme.

Russia redirected its exports to countries such as India, China, and Turkey, which have become significant buyers of its crude oil since Europe reduced purchases.

The Finnish broadcaster Yle recently presented a report indicating that out of approximately 600 ships transporting Russian oil, nearly half are part of the so-called shadow fleet. The Kremlin is exporting the raw material primarily through the Baltic Sea, and several vessels passing through the Gulf of Finland are on the international blacklist, classified as "for repair" or "for scrap."