Unknown companies help Russia expand its shadow gas fleet – FT

New unidentified buyers suspected of having ties with Russia have begun to accumulate dozens of vessels capable of carrying liquefied natural gas (LNG), indicating that Moscow is expanding its "shadow fleet" of gas tankers.

Source: Financial Times

Details: Shipping industry insiders report that a number of previously unknown companies, mostly registered in the United Arab Emirates, have been rapidly acquiring LNG carriers over the past year, pushing up prices on the market, especially for the oldest ships.

This wave of purchases is reminiscent of Moscow's building up a shadow fleet of tankers to transport oil around the world under Western sanctions, often using the UAE as a hub for energy trade.

Although Russian LNG sales have been less affected by Western sanctions than oil sales, Moscow is preparing for possible tightening of restrictions. According to consulting firm Windward, since the second quarter of 2023, more than 50 LNG carriers have changed ownership to UAE-based companies, whereas such transactions were rare.

The ship tracking group Kpler reports that these changes in the LNG tanker market point to a complex network of maritime operations potentially linked to Russian interests. Some Dubai-based groups have opaque ownership structures similar to those operating Moscow's shadow oil tanker fleet.

Some newly acquired LNG vessels now ply routes traditionally used to transport gas from Russia. Kpler noted that one vessel was loading LNG from Yamal, Russia's flagship export project that has not yet been sanctioned.

LNG has become important to the Russian economy in wartime, providing valuable revenue after the loss of pipeline exports to Europe since the start of the full-scale invasion of Ukraine in 2022.

While the EU and Asia, major markets for Russian LNG, have refrained from imposing import bans to avoid destabilising the global gas market, the West has begun to restrict trade.

In June, the EU approved restrictions that prohibit the transshipment of Russian LNG from large icebreakers to smaller vessels in EU ports, which significantly limits Russia's ability to distribute gas globally.

Background:

• Russia has created a shadow fleet to move its oil around the world, but there is now growing evidence that Moscow has begun to create a fleet for LNG as well.
• Three tankers that have recently been sanctioned by the UK have gathered in the Baltic Sea. Two of them are preparing to load oil in the Russian ports of Primorsk and Ust-Luga.
• Russia's oil production is set to remain stable over the next five years, despite international sanctions, as state-owned Rosneft begins production at a major new Arctic project.
• Russia's oil and gas revenues in June will increase by more than 50% compared to last year, to US$9.4 billion.

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