11. January 2024

Danish giant helps Russia avoid sanctions

Russia has established an energy company in India to continue their oil trade around the sanctions. A Danish tanker company has transported products from the Russian company worth billions.

The Danish tanker company has been shipping Russian oil products since June 2023, and in October they delivered 30 million litres of Russian aviation fuel in Copenhagen.

In the Indian port of Vadinar, a long fuel terminal is sandwiched between a colourful coral reef and a multitude of oil vessels.

From here, around 200 large vessels been shipping fuel to Europe and elsewhere since the sanctions against Russia’s energy exports came into force.

But the cargo on the tankers comes from a Russian-owned refinery called Nayara Energy, which allows Russia to sell oil regardless of the sanctions, and is dubbed the “European nightmare scenario”.

Now Danwatch and Ekstra Bladet have revealed that the Danish tanker company Hafnia has transported Russian oil products with an estimated value of up to DKK 2 billion from the Russian refinery with Kremlin connections.

Rosneft is sanctioned, so one might ask why the import of oil from the refinery in Vadinar is not sanctioned. In practice, Rosneft has significant influence
Craig Kennedy
Researcher at Harvard University’s Davis Center

Hafnia, which calls itself the world’s largest tanker company, had the following tankers pass the oil quay in Vadinar between July and August: Hafnia Africa, Hafnia Australia, Hafnia Excellence, Hafnia Seine and Hafnia Shenzhen.

They have transported the products to countries such as Denmark, the UK, Tanzania and the Emirates, and in this way, the company has helped Russia get their oil products to Europe, despite the sanctions.

The vessels have carried more than 2.5 million barrels of Russian aviation fuel and diesel, according to data from the Centre for Research on Energy and Clean Air (CREA) and MarineTraffic.


Hafnia’s routes from India

The map shows the routes of Hafnia’s five vessels

Source: MarineTraffic


Hafnia’s routes from India

The map shows the routes of Hafnia’s five vessels

Source: MarineTraffic

Since the oil products are refined in India, it is not illegal to import them to Europe, but the trade still helps to counteract the intent of the sanctions, according to researcher and sanctions expert Kim B. Olsen from the German Council on Foreign Relations. Olsen from the German Council on Foreign Relations.

He is an expert in Europe’s use of sanctions and has a career background as a foreign affairs analyst at the Danish Institute for International Studies with a focus on sanctions.

“It’s a bad scenario that the Russian state can establish a company in India to buy cheap Russian oil and sell it to Europe as Indian fuel and still reap some of the profits,” he says, adding:

“It exposes the limitations of sanctions. The EU and the US have gone to great lengths to try to get third countries like India to join our side and ensure that sanctions are not circumvented. But very few non-Western countries have been willing to contribute to that. So it’s a nightmare scenario, but also a nightmare that was foreseen,” he says.

Hafnia silent about Indian business

One of the five Hafnia vessels that made the journey from the Russian refinery in India ended up in Copenhagen on 2 October.

It was Hafnia Africa that delivered almost 30 million litres of Russian aviation fuel to Prøvestenen near Amager, as Danwatch has previously revealed.

Apart from a brief telephone conversation in mid-December, Hafnia has not been contactable. Both Danwatch and Ekstra Bladet have tried to contact them by phone, text message and email several times, but no one returns their calls.

When we contacted Hafnia’s reception in January to get in touch with the company’s press officer, we were transferred, but the call once again went to voicemail. Since then, it hasn’t been possible to get reception to connect us.

Despite the fact that Hafnia on their own website describes how transparency is particularly important to them, it is not possible to get a comment on their business with Nayara Energy.

You have to ask yourself: What do we as a company want to be a part of when our home country is in open conflict with Russia?
Kim B. Olsen
German Council on Foreign Relations

Danwatch and Ekstra Bladet also wanted to know to whom Hafnia has supplied Russian aviation fuel in Copenhagen.

On their website, Hafnia also writes that they recognise the UN Universal Declaration of Human Rights and that they have a special interest in working against corruption

Therefore, Hafnia will also not “facilitate payments intended to expedite or secure the performance of routine official acts by governments”.

However, the refinery in Vadinar was specifically established so that Russia can continue their routine oil exports to Europe, Kim B. Olsen assesses. Among other things, he refers to a statement from the state-owned Russian bank VTB Bank, where they themselves emphasise that Nayara Energy’s ownership structure is designed to evade sanctions.

“Russia has stated this itself. It is part of their preparation to mitigate the negative effects of the sanctions. A structure is being created where oil can still be sold, where the revenue and the profits still flow back to Russia,” he says.

  • Why is Hafnia continuing the do business with Nayara Energy, and do you have any concerns about the fact that some of the profits from the oil products end up in the hands of the Russian state?
  • What is Hafnia’s position on the fact that you are shipping products from a Russian-owned company in India, which is deemed to be counterproductive to the purpose of the sanctions?
  • Will Hafnia continue to do business with Nayara Energy?
  • To whom did you deliver 30 million litres of aviation fuel at Prøvestenen on 2 October?
  • How much has Hafnia transported in total from the refinery in Vadinar to Denmark since the sanctions came into force?

At the same time, he believes that transparency is important among companies that do business with companies like Nayara Energy.

“The conflict between Europe and Russia has resulted in costs for consumers. Increased inflation and high energy prices have affected the everyday lives of ordinary Europeans. It is only fair that consumers can question companies’ business practices, even if they are legal,” he says.

The Indian loophole

Although it is legal to buy aviation fuel from Nayara Energy, this is only possible because the Russians are exploiting a loophole in the sanctions that Europe cannot simply close.

Because almost half of Nayara Energy is owned by the Russian state through the oil company Rosneft and about 25 per cent by a private equity fund founded by a Russian billionaire and oligarch connected to Rosneft.

Since neither of them owns the majority stake in the company, it is technically not Russian.

American researcher Craig Kennedy, an expert on Russian oil and sanctions at Havard University’s Davis Center, says that the Vadinar refinery could become a problem for the West if action is not taken.

“Rosneft itself is sanctioned, so one might ask why the import of oil from the Vadinar refinery is not sanctioned. In practice, Rosneft has significant influence over the refinery, but on paper they only own 49 per cent. And according to EU regulations, this may allow the refinery to avoid being sanctioned like Rosneft”, he says and adds:

“It’s a challenge for the authorities. It’s a loophole that needs to be addressed. And while Vadinar’s European sales are currently small in overall Russian exports, this is a leak that could turn into a flood, and then it becomes a real problem.”

Hafnia has, among other things, delivered Russian aviation fuel to Prøvestenen on Amager, as seen in the picture here.

According to Kim B. Olsen, companies trading in such products therefore have a great responsibility to conduct a thorough risk assessment of those they trade with.

“While there is nothing legally wrong with the trade, it is an example of how companies become pawns in the geopolitical game. Sanctions and EU states have limited reach, and this is where the choices made by the companies become relevant,” he says.

When Russia invaded Ukraine, many companies withdrew from the Russian market, not because of sanctions, but for moral reasons.

This is precisely where companies become actors in the conflict when they choose to either continue or stop their trade with Russia, Kim B. Olsen points out.

“Even if it’s within the framework of what you can legally do, it doesn’t mean you’re exempt from criticism. You have to ask yourself: What do we as a company want to be a part of when our home country is in open conflict with Russia?”, he says.

Danwatch and Ekstra Bladet are still trying to get a comment from Hafnia. The first contact with the tanker company was in mid-December and the latest attempt to get a response was made on 10 January.

In addition, there is still no answer as to who bought 30 million litres of Russian aviation fuel, which was delivered by Hafnia Africa in Copenhagen on 2 October.

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