Insurance checks instituted for Russian shadow fleet passing through the Baltic

The UK started this crackdown in October, challenging so-called shadow fleet vessels with what the government described as “suspected dubious insurance” to provide details of their insurance status as they pass through the English Channel. Failure to comply sees ships added to the UK’s growing sanctions list.  The initiative has now been joined by Denmark, Estonia, Finland, Lithuania, the Netherlands, Norway, Poland, and Sweden.

The Danish government has been in discussions with neighbours for months looking at ways of barring some of Russia’s shadow fleet from transiting the Baltic Sea, something that gained added importance following a collision involving a laden Russian shadow tanker earlier this year. Russia sends about a third of its seaborne oil exports through the Danish straits with around one in three of these ships having unknown insurance. 

Today, some 175 tankers laden with Russian oil transit the Baltic each month, according to Craig Kennedy who runs the Navigating Russia substack and proposed similar Baltic insurance checks in a paper for the Brookings Institution in May this year.  If the insurance verification program is successful in the Baltic, Kennedy has suggested setting up a similar one in the Aegean. 

“Together with the Baltic, this would deny Russia the ability to load up to 80% of its oil exports on shadow tankers. Instead, Russia would be compelled to use mainstream tankers, thus increasing the exposure of export revenues to price cap constraints,” Kennedy wrote.  The move by the northern European nations this week coincides with a widening of the EU’s sanctions net on tankers moving Russian oil around the world. The bloc designated 52 more tankers on Monday, having previously listed 17. 

Vessel tracking data compiled by Bloomberg show that 68 out of 106 crude oil tankers that had been blacklisted by the US, the UK, the European Union, or some combination of the three, since October 2023 have not loaded a single  cargo since they were named. Further sanctions are expected in the new year when Poland takes over the presidency of the EU from Hungary. 

At the European Political Community Summit in July, Keir Starmer, the British prime minister, announced what was described as a shadow fleet call to action, something the US and Canada joined in October. 

The call to action urges all member states of the International Maritime Organization (IMO) to prevent illegal operations in the maritime sector by the shadow fleet.

Signatories to the movement have called on flag states to ensure that ships flying their flag adhere to highest possible safety and pollution prevention requirements and best practices while port states are asked to ensure the enforcement of the safety and liability conventions on these ships, including those that relate to ship-to-ship transfer operations and the requirement to have on board valid state certificates of insurance. Signatories have agreed to share information on the practices and operations of the shadow fleet, to coordinate responses to the risks posed by its ships and facilitators, and to work with the private sector and other maritime stakeholders to address the threat.  

In related news, the directorate general of shipping in India, a top buyer of Russian oil, has recently put in place new guidelines to ensure all ships calling at the world’s most populous nation have the correct protection and indemnity (P&I) insurance certificates in place.