Is Russia bypassing oil sanctions via a Dubai company?

The European Union is discussing whether to sanction a Dubai-based shipping company, which is suspected of becoming one of the main transporters of Russian oil, thus helping Russia circumvent restrictions on its oil exports, Politico reported on Tuesday, referring to EU diplomats who spoke on condition of anonymity.

The diplomats said the company, SUN Ship Management Ltd, was believed to have come into possession of a fleet of Russian oil tankers that were no longer allowed to ship oil because of EU and international sanctions on Russian-owned entities.

Russian state-owned company Sovcomflot is believed to have transferred its entire fleet of 92 vessels in April 2022 to SUN to circumvent EU and international sanctions, the diplomats said, according to Politico.

SUN’s website says the company is “owned by UAE and Russian nationals” and owns, manages and operates a fleet of 92 Liberian and Cypriot flagged “Crude Oil, LNG and chemical vessels with a capacity of more than 150,000 tons DWT.”

The diplomats said that the company had become one of the main transporters of Russian oil to countries including India and Cuba, providing a major source of funding for Russia.

According to The Maritime Executive, SUN was once named SCF Ship Management (Dubai), and it was an acknowledged subsidiary of Russian Sovcomflot. In April 2022, shortly after Russia’s invasion of Ukraine and the imposition of Western sanctions, Sovcomflot transferred control of about 90 of its tankers and LNG carriers to SUN.

Sovcomflot has denied that it transferred control of its tankers to SUN. However, SUN manages tankers previously managed by SCF subsidiaries, and most of these vessels still carry their Russian names from their time in the SCF fleet – including more than a dozen that still contain the prefix “SCF.”

SUN’s ex-Russian tankers have become an important source of tonnage for Russian oil exports, according to tanker analysts. EU regulators have noticed, and the government of the Netherlands has proposed adding SUN Ship Management to an upcoming package of sanctions measures, The Maritime Executive says, referring to Reuters.

In December, the Financial Times reported that Russia had “quietly amassed a fleet of more than 100 aging tankers to help circumvent western restrictions on Russian oil sales following its invasion of Ukraine, according to shipping brokers and analysts.”