Some conventional tanker owners have given up trading with Russia. Gatik and Fractal are among the firms that have filled the void.
In India and the United Arab Emirates, companies have emerged that own $2 billion worth of tanker assets. In less than a year, they have assembled a fleet that now delivers millions of barrels of Russian oil around the world.
The office in Indian Mumbai is owned by Gatik Ship Management, Bloomberg writes. However, the room in the office center, recorded as the address of the company, has long been closed, there is not even a door handle on the door, and a pile of mail is lying in front of the entrance. Another company – Fractal Shipping – is located in Dubai. A small office in a seedy industrial area gives no hint that it, too, is a small cog in Russia’s vast new oil supply chain.
“It is this new breed of tanker player that has helped keep Russian oil moving around the world. Sanctions on Russian oil appear to have had very little effect on total exports,” said Rebecca Galanopoulos Jones, senior content analyst at VesselsValue, who tracks the prices of thousands of merchant ships.
The $60 per barrel price cap for Russian oil was set deliberately high – the US wanted discounted Russian oil to continue to hit the markets, and both new shippers are using a lot of Western insurance.
According to data compiled by Bloomberg, about three-quarters of Gatik’s fleet is serviced by the Mutual Funds of the Club International Protection and Indemnity Group in Britain. Both companies have in their fleet many vessels registered with one of the 13 member organizations of the International Group – the “American Club” headquartered in New York.
American Club COO Daniel Tadros confirmed that his organization services Gatik and Fractal vessels, adding that both companies have provided so-called attestations – documented statements confirming that oil purchases are made in accordance with the G7 price cap.
The need for companies such as Gatik and Fractal has risen because many traditional Western shipping companies have stopped shipping Russian goods, either in protest of Russia’s invasion of Ukraine or the threat of sanctions.
Even before the embargo began, a huge number of tankers began to be sold to a new group of buyers, whose identity and ownership were often unclear.
According to Bloomberg, the Gatik fleet can carry about 30 million barrels of oil and fuel. Fractal’s transport capacity is approaching 15 million barrels.
According to tanker tracking data, almost all of the Fractal and Gatica tankers this year called at Russian ports or received Russian cargo with ship-to-ship transshipment.
India and the UAE have not supported the introduction of a price cap and they have no other sanctions on Russian oil. They can also legally use Western services if they can verify that the shipments were purchased at or below the marginal price.
According to VesselsValue, a firm that tracks the sale and purchase of merchant ships, the earliest recorded acquisition of a tanker by Gatik was in June 2022 and the latest in February this year. According to the information system Equasis, Fractal registered ships in the same month.
One such example is the tanker “Gatik” Jumbo, which on February 11 was seen calling at the port of Ust-Luga in the Russian Baltic Sea. According to Equasis, the ship was taken over by Gatik on February 3rd.
Russia exported about 3.2 million barrels of crude oil per day from its ports in the two months after it imposed a restriction and ban on imports from Europe on Dec. 5, little changed from the previous two months. The two named firms are part of a new supply chain network to make this happen.
Neither Gatik nor Fractal are listed as the beneficial owners of tankers in their fleets, meaning they likely operate ships for others, whose identity is often not made public. On the American Club website, they are listed as “registered owners” of their boats. This is a common form of ship ownership in the shipping industry, but does not indicate the true owner of the ship.
Oil embargo – what is known
As UNIAN reported earlier, Europe and the G7 countries have banned almost all marine oil imports from Russia since December 5, 2022. As part of the embargo, an upper price limit for the sale of Russian oil was introduced at $60 per barrel.
Since February 5, 2023, the EU and G7 oil sanctions have extended to oil products from the Russian Federation, in particular diesel fuel, fuel oil, and so on.
To help Russia circumvent sanctions, a shadow fleet of tankers has emerged. At first it was a small armada of oil tankers, but now hundreds of ships with fuel are trying to hide from prying eyes where they are going. The Russian fleet of “shadow” oil tankers is becoming a problem for everyone else: freight costs are rising due to a decrease in the number of free ships on the market, and experts are not sure that these tankers will return from the “shadow” fleet to the normal transport market.
As CNN reported in early March, the Russian shadow fleet is replenished with 25-35 vessels every month. In total, about 600 tankers (10% of the world market) are used to transport Russian oil.