Russian LNG Poses ‘Manageable’ Risks, New Report Says
With Russia having recently restarted production of liquefied natural gas at its Western-sanctioned Arctic LNG 2 project, compliance officers should prepare for the increased but “manageable” risks that Russian LNG poses, according to a new report released by Blackstone Compliance Services.
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Compliance officers should confirm the origin of LNG and the terminal where it’s loaded, the report advises. They should also identify LNG carriers that are likely to evade sanctions, including those previously operated by major Russian shipping firms or those recently placed under management by firms in “high-risk countries.”
As part of an apparent effort to create a Russian LNG “dark fleet,” Novatek, the company that oversees Arctic LNG 2, transferred four vessels to a new United Arab Emirates company, White Fox Ship Management, in January 2024, the report says. Another new UAE firm, Nur Global Shipping, acquired five LNG carriers, and three of them, Aysa Energy, Everest Energy and the Pioneer, have already spoofed, or faked, their locations and loaded fuel from Arctic LNG 2.
“The introduction of Nur Global and White Fox's fleet signals a newfound willingness to engage in advanced deceptive shipping practices when dealing with LNG," the authors wrote.
The three vessels that engaged in spoofing were “rapidly transferred” by Nur Global to a new Indian firm, Ocean Speedstar Solutions, the report says. The U.S. government on Aug. 23 sanctioned Ocean Speedstar, White Fox and their collective seven LNG carriers that visited Arctic LNG 2, but it did not designate Nur Global (see 2408230031).
The report recommends that compliance officers conduct “enhanced due diligence” for LNG transactions that originate from Russia or that are destined for European ports. It also suggests using vessel sanctions screening software to spot suspicious changes in vessel management.
“The LNG market is small and the initial moves by high-risk actors were easy to detect,” the authors wrote. “At last count, there are only 664 LNG carriers in service, which is only a fraction of the number of crude oil and products tankers in service, and changes in their ownership and management are infrequent enough that when they do happen, they are very noticeable.”
The report suggests that “other means,” such as all-weather synthetic aperture radar imagery, may be needed to visually confirm sanctions evasion, as the Arctic LNG 2 project’s Yamal facility and the false location used by spoofing vessels both frequently experience poor weather and cloud cover. It also says that transactions involving the 15 Yamalmax LNG carriers, which were designed to carry LNG from the Yamal terminal, may carry heightened risk.