British accountant's secret fleet fuels Russian oil bypass
According to an investigation by the Financial Times, the British accountant John Ormerod has assisted Russia in acquiring at least 24 old tankers for its "shadow fleet." The funding was provided by a Dubai-based company owned by Lukoil, while the management of the ships was handled by companies from the United Arab Emirates.
The shadow fleet, also known as the "ghost fleet," enables Russia to export approximately 4 million barrels of oil, circumventing Western sanctions. This generates billions of dollars in annual revenue, which helps finance Russia's war in Ukraine, the British daily reports in its Thursday edition. Since 2022, Russia has spent over 10 billion dollars on such ships.
Additionally, according to sources cited by the FT, an oil spill from these obsolete tankers and the subsequent environmental disaster are considered highly likely.
The 74-year-old Ormerod assisted in assembling this fleet of old and worn-out tankers. From December 2022 to August 2023, he spent over 700 million dollars on purchasing these ships. Each vessel was bought by a different company registered in the Marshall Islands, with transactions financed by the Dubai-based company Eiger Shipping DMCC, owned by Lukoil.
The British shipping broker Braemar, one of the largest players in this sector, facilitated at least nine of these purchases.
The management of the tankers was assigned to companies registered in the United Arab Emirates and owned by the shipping tycoon Muhammad Tahir Lakhani, a Pakistani with British citizenship.
The FT explains that companies in Dubai are not required to comply with Western sanctions unless they receive funding from G7 countries.
Identifying the true buyer of the tankers was complicated by a chain of ownership involving shell companies. Eventually, at the end of this chain was Ormerod. The tankers acquired flew the flag of the Cook Islands.
Craig Kennedy, an expert on Russian oil and tankers from Harvard University, explained that all these complex arrangements were intended to hide the fact that the transactions are conducted on behalf of Lukoil, the tankers are owned by Russia, and the purchases are financed by Russian banks.
In a conservative estimate, assuming the oil price was 60 dollars per barrel, the tankers purchased by Ormerod transported 120 million barrels of oil, earning Russia about 7.2 billion dollars, calculated the daily.
A catastrophe is only a matter of time
Western companies consider scrapping tankers after 15 years of use due to wear and potential repair costs. Benjamin Hilgenstock, an expert on oil sanctions, said the average age of ships in the Russian shadow fleet is 18 years, making it unlikely they can be insured against oil spills.
Shadow tankers carrying Russian oil frequently cross European waters, including the Baltic and Mediterranean Seas. Several incidents have already occurred, and a severe catastrophe is only a matter of time, added Hilgenstock.
In December 2022, EU restrictions took effect, banning the import of oil by sea and setting a global price cap for Russian oil at 60 dollars per barrel, as agreed upon by the EU and G7.
These measures were anticipated to cut Russia off from a large portion of the world's tanker fleet since insurers like Lloyd's of London cannot insure ships carrying Russian oil due to sanctions unless sold under the price cap program.
Russia redirected its exports to countries like India, China, and Turkey, which have become larger purchasers of its crude oil as Europe reduced its intake.
The Finnish broadcaster Yle recently reported that of approximately 600 ships transporting Russian oil, nearly half belong to the shadow fleet; the Kremlin primarily exports its resources through the Baltic, with several vessels passing through the Gulf of Finland being internationally blacklisted and classified as "for repair" or "for scrap."
