INSUBCONTINENT EXCLUSIVE:
Intense US-led diplomatic wrangling to soften aggressive European Union sanctions has been going on for months but time is ticking.
Will it
To do that, buyers would have to sign up to a controversial oil price cap.
What looks certain is that a large part of Russian flows will
be handled by a complex -- and often secretive -- network of ships, owners, ports and safe passages dominated by entities still willing to
which runs a fleet of 170 ships -- none of them serving Russia.
In the run-up to Dec
5, when the EU is due to ban Russian crude imports and halt the provision of shipping, financing and insurance cover to related trades, the
most important question is whether there will be enough vessels.
Shipbroker Braemar estimates that to support four million barrels a day
of Russian exports to the far east, many of the recently-transacted vessels will need to be added to the 240 ships -- 102 Aframaxes, 58
Suezmaxes and 80 very-large crude carriers -- that have carried Iranian and Venezuelan crude in the past year to form a large shadow fleet
Many are older ships and will find their way to the shadow fleet, with Russian shipowner Sovcomflot PJSC supplying some tankers as
well.Ship-to-Ship
Beyond that, there will also almost certainly be a surge in ship-to-ship transfers -- cargoes being switched from one
top export region.
Ship-to-ship transfers involve one vessel maneuvering itself alongside another, attaching a pipe to allow the cargo
to be pumped between the two carriers
It can take up to two days and is best done in the calmest waters possible with good weather
Some can involve a multi-stage process of transferring oil from an initial tanker to a floating storage facility, before another step to
move the cargo to another ship
Covert Operations
While vessels often used to sail straight to European buyers, Asia -- notably China and India -- seem certain to
become the top destinations after Dec
very helpful for Russia or its buyers to do them inside the Baltic Sea
board.
The initial vessel would turn around after discharging its cargo to that supertanker and return for more Russia oil, creating a
jurisdictions that have sanctions or curbs against Kremlin.
While some shipbrokers floated possible suggested locations like Gibraltar
and Ceuta, others had doubts citing their links to UK and Spain, which that restrict trade with Russia.
Another STS transfer option
could be out on the high seas, even in the middle of the Atlantic Ocean where waters fall outside maritime jurisdictions controlled by
Shippers zeroed in on an area in the mid-North Atlantic near a cluster of islands known as Azores, an autonomous region of Portugal, as a
possibility.
While STS operations tend to be costly with an element of risk, this practice will be paramount in ensuring the continued
shipments from sanctioned regimes to undergo one STS, shippers are not ruling out the possibility of two transfers -- one inside the Baltic,
activity in the used tanker market, specifically concentrated on the type and class of ships that will be heavily used to move Urals and
ESPO from their export terminals.
One such tanker type is Aframaxes, the smallest mainstream international tanker that can carry about
650,000 to 750,000 barrels of oil through shallower waters and from shallower ports.
Aframaxes with ice-breaking capabilities have been
Ice-class Aframaxes are fetching double the price from a year ago with buyers preferring to keep their identities a secret.
Shipbrokers
also observed a rise in trading activities for non-ice class aframaxes aged 15 years or older
difficulties finding industry standard insurance.
Most tankers are covered against risks including oil spills by 13 member
organizations within the International Group of P-I Clubs, many of which are in Europe
companies.
The UK has yet to fully follow the EU, meaning that some cover could still be available
The IG itself is in London.
The price cap would make European services and insurance available to companies who pay adhere to a price
up, the bloc had two important stipulations.
First, that shipping companies -- including the giant Greek fleet -- would be included
center for insurance and reinsurance and without it, owners risk being under covered against risks including oil spills
That makes adhering to EU sanctions -- and the cap -- a very polarizing and uncertain issue for tanker owners
just over six weeks to go.
--With assistance from Jack Wittels and Julian Lee.
