Beyond the reach of sanctions: shipping oil via the Northern Sea Route

MariTrace, 9 October 2023

Aerial view of Murmansk and Kola Bay, Russian Federation. Source: MariTrace.

While the US is considering how to enforce the $60 limit on Russia's crude oil exports. it is clear that sanctions evasion has become a persistent and complex problem as traders and supply chains find ever more creative ways to exploit loopholes in laws and monitoring. The second order effects of sanctions evasion are spreading rapidly: worldwide, vessel owners and operators who are already willing to do business with little regard for environmental protection are unlikely to be swayed by further measures demanding compliance. The Arctic environment may all too easily become a silent casualty.

Total volume of oil exports from the Russian Federation to China, India and the UAE, 5 years to date. Source: MariTrace data.

Russia is shipping oil via the Arctic Ocean to buyers in China and beyond, using thin hulled tankers. These journeys are not new: tankers have been ferrying Russia's oil out of Kola Bay through Arctic waters since at least 2017. Russia has been sending LNG tankers to China via the Northern Sea Route - unaided by ice breakers - since 2017; and from the Yamal Peninsula, since 2021.

Cross section: single hull vs. double hull tankers. Image source: Clear Seas.

In October 2022, reports suggested ice-class Aframax tankers were being sold at twice the price of the same class a year earlier. But the recent addition of aging tankers voyaging through the fragile Arctic ecosystem lack the double walled hull mandated by MARPOL Annex I that is intended to provide protection in the event of collision or exposure to extreme conditions.

The Leonid Loza is a 250m long, 157,000 DWT tanker, part of Russia’s state-owned fleet, managed by Sun Ship, based in the UAE. Analysis of MariTrace data for the routes taken by the Leonid Loza during the past year show that the tanker typically departs Murmansk and travels west, around the UK. through the Mediterranean Sea, the Suez Canal and the Malacca Strait, eventually reaching ports on the east coast of China. This route typically takes about sixty days. Last month, AIS data suggests Leonid Loza departed Murmansk but this time travelled east through the Arctic Ocean and the Bering Strait, arriving in China’s waters approximately 140 km due east of Ningbo on 4 October, for a total journey time of about 24 days.

Route of the Leonid Loza, October 2022 - October 2023. Source: MariTrace.

Over the past year, Leonid Loza has also visited Croatia, in October 2022, the Jamnagar oil terminal in Gujarat, India in December 2022, Novorossiysk (in the Black Sea) in October 2022 and March 2023; Mumbai in February 2023 and a CNPC oil terminal in Myanmar in June 2023. A similar vessel, the NS Bravo also took the Arctic route from Murmansk in September 2023. NS Bravo visited Jamnagar in November 2022; and Visakhapatnam, on India’s east coast, in April 2023.

Route of the NS Bravo, October 2022 - October 2023. Source: MariTrace.

Despite its location, the ports in Kola Bay comprise Russia's only European hub that remains free of sea ice, offering year-round access to the major ocean routes. In calculating the trade-off between distance (i.e. fuel costs), time to market and voyage risk, environmental concerns are an afterthought. Given that most of Russia's proven oil reserves are in Western Siberia, the practice of routing aging tankers through the Northern Sea Route is likely to continue for the immediate future - with or without sanctions.

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