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.
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.
OVERVIEW
The map shows the routes of Hafnia’s five vessels
OVERVIEW
The map shows the routes of Hafnia’s five vessels
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.
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.
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.
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.
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.”
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.
Since October, at least ten large oil tankers from Russia’s so-called dark fleet have been allowed to anchor in Danish waters off the port of Skagen.
According to international maritime data company Lloyd’s List Intelligence, they are part of a network that helps Russia make billions from the oil trade, bypassing EU sanctions.
Danwatch can reveal this based on data from MarineTraffic and Lloyd’s List Intelligence.
It may be both illegal and a circumvention of the sanctions against Russia that the vessels have docked in Denmark. And the ten vessels are just a random sample. Data from MarineTraffic and Lloyd’s List Intelligence shows that vessels from the dark fleet have docked at Skagen almost weekly since the sanctions came into force around the turn of the year.
Lloyd’s List Intelligence has analysed the ten vessels in Skagen and assesses that they are sailing without insurance, with hidden owners and with oil that has been traded far more expensive than what EU sanctions allow.
According to the World Bank, it is precisely these dark vessels that undermine the EU’s sanctions against Russia and have led to the current price of Russian crude oil averaging USD 80 per barrel, rather than the USD 60 price cap targeted by the sanctions.
The consequence of this is that Russia is making far more money for the treasury and thus the war in Ukraine, which was the reason the sanctions were imposed in the first place.
An example of this is the vessel Vela Rain, which sailed from the Russian oil port of Primorsk in the Baltic Sea on 16 October and arrived in Skagen on October. According to MarineTraffic, the huge oil vessel was loaded with up to 800,000 barrels of Russian oil, which has a value of almost half a billion Danish kroner.
Danwatch has attempted to contact the owner of Vela Rain, but they have not returned our request.
Michelle Bockmann, Chief Analyst at Lloyd’s List Intelligence, says that Denmark has a unique opportunity to control and detain oil vessels coming from Russia because they dock in Ålbæk Bay. The vessels do not dock in other European countries, she states.
“In ten minutes, I can make a list of oil vessels with no known insurance. So can the Danish authorities,” she says.
Many of the oil vessels sail with some form of insurance papers, but they are often “worth less than the paper they are written on”, says Michelle Bockmann.
“Many of the vessels fly the flags of countries like Gabon and Cook Islands. My cat could get insurance papers from those countries if it just presented some kind of insurance company to the maritime authorities in those countries. They don’t check anything,” she says.
Often, the insurance companies don’t even exist. And even though it is illegal, the vessels are still allowed to enter Denmark.
But in the future, Denmark may end up having to inspect these vessels – and on a much larger scale.
The Financial Times reports, based on anonymous sources in the EU, that Denmark has been selected to monitor oil vessels arriving from Russia. This is despite the fact that Denmark has so far not inspected the vessels at all, even though they have repeatedly been in Danish territorial waters.
When the oil tanker Canis Power suffered engine failure off the coast of Langeland in May, it quickly became clear that the vessel was part of Russia’s so-called dark fleet.
When the Danish Maritime Authority became aware of the Canis Power incident, they issued a request to have it inspected at the first opportunity by the countries in the Paris MoU, which is an international agreement on port controls in Europe, among other places.
But there is no difference between Canis Power and the other ten vessels that have docked at Skagen, says Michelle Bockmann.
“If they believe that Canis Power is suspicious due to safety risks, they should make the same assumption for the other ten vessels,” she says.
When the dark vessels dock in Ålbæk Bay, they are not inspected by Danish authorities. It is not customary to do this at anchorages unless there is a concrete suspicion against a vessel.
However, in the ten cases where Lloyd’s List Intelligence assesses that the vessels at Skagen have sailed without insurance and with sanctioned cargo, Denmark should have inspected them anyway. This is according to Philip Max Cossen, associate professor of Maritime Law at Svendborg International Maritime Academy.
“It’s within the realm of port state control. It’s clear grounds. There is a strong suspicion that these vessels do not comply with their obligations and do not have the documentation in place,” he says.
The oil vessels sail from the western Russian oil ports – mainly Primorsk – to Ålbæk Bay near Skagen, before continuing on to countries such as India with the oil.
Philip Max Cossen points out that, by law, the Danish authorities should react to the vessels if they do not have the convention-bound and internationally recognised CLC insurance.
“It’s a clear ground for detention if they don’t have a CLC certificate,” he says.
And if the oil cargo is found to be sanctioned, the oil must be confiscated, he says.
Danwatch is working to get a comment from the Danish Maritime Authority. This was not possible before publication.
According to Lloyd’s List Intelligence, many of the shady oil vessels sail for shipping companies with only that one vessel affiliated, and if you take a closer look at the owners of the vessels, the address is often somewhere in India or the Middle East, where there is no shipping company present at all, says Michelle Bockmann.
“They only exist on paper. Often they don’t even have an email address associated with their company. Therefore, it’s hard to hold them accountable if an accident happens,” she says.
There have already been several accidents with dark vessels. Most recently, it was the vessel Pablo, a large oil tanker that exploded off the coast of Malaysia in May.
There was no cargo on board and therefore no oil spillage, but several crew members died during the accident on the old vessel.
It later turned out that the vessel’s insurance company didn’t exist either, which is why Pablo still remains in the same place where the explosion took place.
“The Pablo was sailing under the flag of Gabon, like many of the vessels in Denmark. No company will clean up after the accident because there is no one to pay for the cleanup,” says Michelle Bockmann.
However, it’s easy to get to the bottom of whether insurance companies even exist, says Michelle Bockmann.
When he vessels present their insurance documents – the so-called blue cards – in some cases it can be as simple as Googling the name of the insurance company to reveal that they don’t exist, she says.
According to the Financial Times, it has not yet been confirmed that Denmark will inspect all oil vessels arriving from Russia. However, Kremlin spokesman Dmitry Peskov has stated that it would be against international law if the vessels were stopped in international waters on their way through Denmark.
He was also asked whether Russia will use warships to escort oil exports through Denmark. Dmitri Peskov did not want to comment on this.
