Russia likely preparing new shadow fleet for LNG sales

According to shipping industry insiders, a group of previously unknown companies, mostly registered in the United Arab Emirates, have rapidly acquired LNG vessels over the past year. This, in turn, has driven up market prices, particularly for the oldest vessels.

Despite Western sanctions having less impact on the sale of Russian LNG compared to oil, Russia is likely preparing for tighter restrictions.

In the second quarter of 2023 alone, more than 50 vessels were purchased. Prior to that, such deals were rare.

The team from the vessel tracking group Kpler, specializing in risk and compliance, stated that developments in the LNG tanker market indicate a complex network of maritime operations potentially linked to Russian interests.

According to Kpler data, some of the previously acquired LNG vessels are now operating on routes used to transport gas from Russia. Another vessel is loading LNG from Yamal, Russia's major export project that has not yet been sanctioned.

Toby Dunipace, managing director of LNG at SSY, said that the market for older steam turbine LNG carriers has shrunk due to stricter environmental regulations and also due to significant improvements in LNG propulsion technology. However, there is now a revival in the value of these types of vessels. This can be partly explained by the fact that they are becoming part of the “dark fleet”.

Sanctions on LNG

Liquefied natural gas is important for Russia for several reasons:

• It is a key export commodity that generates significant revenue for the state budget.
• LNG allows Russia to expand its markets, as it can be transported by sea to countries that do not have pipelines connecting them to Russia.
• The production and export of LNG contribute to Russia's energy independence and strengthen its position in the global energy market.

Meanwhile, the French Senate Committee has called for Russian LNG to be included among sanctioned energy products and for its import to be halted