Black Sea: Andrii Klymenko about oil embargo, grain deal, and “shadow fleet”

Andrii Klymenko – Crimea studies expert and the Head of the Monitoring Group of the Institute for Black Sea Strategic Studies, which last reports in cooperation with BlackSeaNews featured violations of the European Union’s embargo on Russian oil products.

The expert explained for “The Ukrainian Review” who and how breaks the sanctions and also clarified some moments in two other recently popular media topics, related to the Black Sea area – extending the grain deal and the Russian shadow fleet.

Greece – a violator of the embargo

“More than 600 tankers from different countries and shipowners currently participate in exports from Russian Black Sea ports. If we talk about crude oil, up to 70 percent are vessels owned by companies from Greece. As for the export of petroleum products (diesel fuel, fuel oil, and others), there is also a huge share of tankers owned by Greek shipowners, but there are still many Russian and Turkish tankers.

Unfortunately, we see that after the introduction of the European and G7 embargo, there is an increase in exports from Black Sea ports. We saw growth in December 2022, specifically in deliveries to the EU countries: it was a million tons. And in January 2023 we saw 1 250 000 tons.

The fact is that the European Commission, the executive body of the EU, does have neither the mandate to control nor resources for it, they don’t have people who oversee the implementation of decisions. This is entrusted to national governments. So the implementation of EU decisions depends entirely on how the governments of the countries treat these rulings. As far as crude oil is concerned, we see that 70-80% of embargo violations, those we recorded in December 2022 and January 2023, are violations in Greek territorial waters.

In fact, this relates to the so-called raid transshipment of oil. A tanker from a Russian port (for example, Novorossiysk) with crude oil arrives in the Laconian Gulf in Greece, enters the 12-mile zone of Greece, and transships Russian oil to other tankers that go to destinations and ports unknown to us. The 12-mile zone or territorial waters are the sovereign territories of a state. So, we see that through the sovereign territory of the EU state Greece, the transit of Russian oil under sanctions to other countries takes place. There are three more countries that we recorded – Italy, Spain, and the Netherlands – each of them also received one tanker in January 2023. One tanker with crude oil is 150 thousand tons. This is a very large vessel with very large volumes of cargo.

Why is Greece such a major violator of the embargo? The fact is that this country has one of the largest fleets of tankers in the world. As it turned out, this business is very developed there and it is run by very powerful companies owned by billionaires. And we all understand that a billionaire always has a special relationship with governments. We do not rule out that the Greek shipowners have a special political position here. Of course, this should not be the case, they should adhere to those foreign policy decisions made by their state.

We have informed the European Commission about this and hope that they will take appropriate steps on their part. In EU practice, questions or requests to the government to pay attention come first. Well, if we do not see such facts of embargo violations decrease, our team will more actively inform the Ministry of Foreign Affairs of Ukraine about these, so Ukrainian diplomats also will turn to partner countries and allies at this level.”

 

Will the grain deal be extended?

“The grain agreement is not a business, but, above all, a humanitarian project. And we know why it became possible. This happened because the initiative came from the UN Secretary-General António Guterres, and the position of the Republic of Türkiye and President Recep Tayyip Erdogan personally was decisive.

The fact is that there has been such a vector in the Republic of Türkiye‘s foreign policy for many years: they want to be leaders in the Islamic world. And those countries of Africa and Asia, where there are problems with food, are mainly Islamic countries. This gives Türkiye dividends for political perception in these countries as well as an international authority. In addition, Türkiye earns from this. This country receives a significant part of Ukrainian grain in its ports, it processes it into flour and exports this flour further to other states. Turkey dreams and is gradually becoming such a logistic hub, both for the processing of grain cargoes and for the processing of petroleum products.

If we look not at crude oil, but at oil products, Türkiye is the undisputed leader in the supply of Russian them from the Black Sea. They receive Russian oil products and send them to the Turkish oil refineries to export later because these from Russia have low quality. 

Termination of the grain agreement will mean a sharp deterioration in Russia’s relations with Türkiye. Therefore, Russia will complain as usual that it is poor and unhappy, that everyone insults it, and does not want to listen. But in fact, the decisive factor will be the position of Türkiye, so I think that all of that will be preserved.

There is such a marker why I say so. After the October 29 2022 naval and air drone attack on the main base of the Russian Black Sea Fleet in occupied Sevastopol, Russia announced for several days that it would stop participating in the grain initiative. Literally, during the day, there was a rather harsh comment by the Minister of Defense of Turkey, who said that no matter what Russia says, Turkish ships will continue to go to Ukrainian ports for grain.”

(“The Ukrainian Review” explained some Russian fakes about grain deal here, – Author’s note)

 

A myth and truth about the Russian “shadow fleet”

“There is no shadow fleet, it is journalistic fiction. I think it was the desire to make such kind of an interesting headline. 

What impression do the readers or viewers have when they hear «shadow fleet»? It’s something that no one sees and it’s doing something illegal. This is not true. There is not a single merchant ship in the world that is not registered, and there is little or no merchant ship in the world that goes on a voyage without the appropriate package that allows it to go to sea. 

So what is it about? EU and G7 sanctions on the export of Russian oil and petroleum products are not just an embargo. The sanctions also prohibit the use of these countries’ vessels and the services of insurance and other specialized companies for the export of Russian oil and its products to countries other than the G7 and the EU, if the price of these products is higher than the price cap (More detailed about this you can read here, – Author’s note).

For example, Greek tankers are one of the largest fleets of this kind in the world. And that is why even now we see that more than half of Russian oil exports to the countries of Asia and Africa are once again Greek vessels. Of course, there are many questions about who has seen these contracts, who knows the real price, and whether the Russian Federation is fooling around in its repertoire.

The same applies to insurance companies. The fact is that more than 90% of marine insurance is the so-called “London club”. This is a group of huge global companies that can insure marine risks. It is a very expensive business, because if something happens to the ship and the ship sinks, then the company must have the financial ability to compensate for the losses. And a large tanker costs dozens of millions of dollars, many dozens. In addition, if a tanker sank and oil was spilled, there are huge losses and huge lawsuits from the countries in whose waters this oil was spilled. This is also dozens and hundreds of millions of dollars. So these companies cannot be small.

EU and G7 insurance companies are also prohibited from insuring such transportation if the price exceeds the price cap. What did the Russian Federation do? For example, half a year or more ago, the Russian Federation re-registered several dozen of its tankers in Dubai, UAE. It turns out that the tanker is not a Russian one, but one that belongs to the UAE, it has the flag of Liberia or the Marshall Islands, and so on. For specialists, this is such a naive attempt to hide these shipments.

In addition, there are not only Greek tankers in the world. There is a tanker fleet in Korea, Vietnam, India, Singapore, Turkey, and many other countries that do not support sanctions. And in this case, when people talk about the shadow fleet, these are actually those tankers that belong to those countries that do not support the ban on Russian oil export and that replaced part of the tanker fleet of European countries.”

 

Alina Kuvaldina