Page 24 - RusRPTAug24

will neutralize the risk of a financial crisis but, in the future, will have to capitalize loss-making companies and banks,” said Kiselev. “At the end of the day, all that financing will be at the expense of taxpayers and investors.”
2.3 Assessing Russia`s Shadow Fleet
The Kyiv School of Economics (KSE) wrote a report on the state of play with Russia’s shadow fleet of tankers. The main conclusions include:
● wWe estimate that, as of the first quarter of 2024, 435 vessels are part of the Russian shadow fleet, i.e., they are not owned, managed, or insured by an entity in the sanctions coalition and, thus, the price cap does not apply to them. Most importantly, these tankers do not carry oil spill (P&I) insurance from the International Group (IG). 185 vessels are transporting crude oil and 250 are transporting oil products.
● The vessels of the Russian shadow fleet can cover ~60% of total crude and ~45% of total products exports independent of restricted maritime services. Despite a concerted – and costly – effort to build up the shadow fleet, Russia still falls short of its ultimate objective with regard to sanctions evasion.
● We identify three key channels through which Russia has built its shadow fleet: (1) transfer of tankers that were previously owned by Russian entities, e.g., Sovcomflot, to new management companies; (2) purchase of vessels older than 15 years from the mainstream (or white) fleet, which had carried P&I insurance from the International Group before; and (3) acquisition of very old vessels (20+ years) from the shadow and white fleets, which would have otherwise been decommissioned. Stripping mainstream fleet vessels of their service relationships with coalition countries has been the most important strategy.
● Only a small share of the current Russian shadow fleet was built by transferring vessels from other segments of the global shadow oil trade, e.g., actions related to Iran or Venezuela. We estimate that the non-Russian shadow fleet consists of 575 tankers. Most of these are not suitable for Russia due to their size (VLCCs) or ownership/management structures that do not allow Russia sufficient control.
● In terms of the future expansion of the Russian shadow fleet, we estimate that ~500 Aframax equivalent crude oil tankers – mostly from the white fleet – are potentially available (3.6 times what is needed to become fully independent of the price-cap compliant fleet. For oil products, we assess that ~1,200 Seawaymax equivalent vessels are available for further growth (2.8 times what is needed).
24 RUSSIA Country Report August 2024 www.intellinews.com