As the world’s shipping industry is experiencing increased costs due to rising oil prices, countries are trying to establish the most efficient trade routes, which are often complicated by various geopolitical complications throughout the world. Naturally, the world’s biggest exporting countries are doing their best to mitigate their risks, deliver the goods on time, and, most importantly, stay compliant.
However, all these efforts become significantly more complicated when a country is under international sanctions and is not able to use regular trade routes and work with established partners.
In response to a full-scale Russian invasion of Ukraine on February 24, 2022, the international community has responded with an array of crippling sanctions targeting major sectors of the Russian economy and significantly restricting options for oil shipments.
An investigation by the French newspaper Le Monde, titled “Russia’s ghost fleet: Moscow’s new oil routes,” revealed that after the EU’s embargo on Russian oil, it continued to flow to Asia and, on certain occasions, ended up in the EU countries after being refined.
While acquiring old vessels to transport oil helps Russia recoup some of the profits lost due to the sanctions, it also creates the potential for an environmental disaster as older ships are less reliable and are prone to all sorts of age-related malfunctioning, which may result in a devastating oil spill. This, however, is not the only workaround that Russia is using to maintain its oil exports.
A story published by the Financial Times reported that “Russia has authorized unreinforced oil tankers to sail through its icy Northern Sea Route.” This not only allows Russia to evade the sanctions but also to deliver its oil faster.
While a southern route through the Suez Canal takes 45 days, shipping through Russia’s Northern Sea Route takes 35 days. Shipping oil through the Arctic triggered an even broader alarm of a potential catastrophic oil spill in the article, which would be difficult to get to and contain.
Reuters reported that Russia’s Gazprom delivered its first LNG shipment to China through the Arctic in mid-September. As Russia continues to develop its oil and gas project in the Arctic, shipments through Russia’s Northern Sea Route are likely to increase.
