The Analyst

LUKOIL SANCTION BUSTING CONTINUES WITH UK COMPANY HELP

Twenty five ‘grey tankers’ each of purchased by a separate offshore company, which was linked to one or even several other firms are in fact owned by Lukoil, the Russian oil giant. The ships were previously operated by Dubai-based shell companies owned by a Pakistani shipping magnate, currently facing prosecution in British courts for defrauding investors.
All purchases were financed by Dubai’s Eiger Shipping DMCC, which belongs to Litasco Middle East DMCC, the Middle Eastern branch of Lukoil’s oil trading division. Eiger provided upfront funding by pre-chartering the vessels being prepared for acquisition, making sure they were available and paying in advance, which funded the purchase. Lukoil spent around $700m on the tankers making them around $28m each.
The price underlines their extreme age and poor condition as the scrap value wouldn’t be much less.
Since their purchase, the vessels have been used almost exclusively to transport Russian oil, with 82% of the shipments being Lukoil oil, totalling around 119 million barrels. At $60 per barrel, this amounts to nearly $7.2 billion.
Yet again a UK company has been a key player in this deliberate sleight of hand by Lukoil to cover its tracks. British accountant John Ormerod who owns Ormerod Allen & Co., has provided financial services to the shipping industry since 1990. It seems unlikely that a company with such experience and understanding of the market would have had no idea of who they were likely dealing with.
The Russian shadow fleet consists of more than 400 tankers. Despite increasing efforts by Western countries to target individual vessels through sanctions, oil companies shield them behind so many shell firms that it is extremely difficult to prove their connection to Russia.
The fleet is old and dangerous representing a serious accident and environmental threat around the world, and without it Russia would be crippled. The need to add additional tankers isn’t connected to the amount of oil being sold as much as it represents a huge pool of crude storage capacity - so that Russia doesn’t have to cut production.
The tankers leave Russia more often than not without a buyer for the crude they carry - then spot deals are made as they sail around the worlds oceans. The longer they spend at sea the price drops until someone buys it. They then unload and head home for a reload. Sometimes the tankers sit about off various countries that have been previous buyers just waiting for a deal to be made. Singapore, China and India, as well as many others, have used this to get crude at knock down prices, but the Russians eventually don’t care as long as they get something for it.
This trade is the lifeblood of the Russian war effort - every country that participates has blood on its hands but they just don’t care.