The largest insurer warned of an impending disaster due to Russia's "shadow fleet"

Russia's use of a "shadow fleet" of outdated and insured oil tankers increases the risk of a massive oil spill. Rolf Tore Roppestad, CEO of one of the largest shipping insurance companies Gard, said this in an interview with the Financial Times.

Quote: “This is a social and environmental disaster waiting to happen and should be of great concern to all of us,” Roppestad said.

• Energy market participants are worried that smaller and less experienced traders are now transporting oil over long distances in old ships with obscure insurance, writes the FT. Since the beginning of the war, "several thousand" new tankers have appeared in Ukraine, trading without insurance from one of the members of the International Group of Mutual Insurance Clubs (International Group of P&I Clubs, IG), Roppestad calculated. IG includes 12 of the largest maritime mutual insurance clubs, including the Norwegian Gard. Together they provide liability insurance for approximately 90% of the world's ocean tonnage.
• Roppestad expressed concern about the ability of non-IG insurers to deal with an oil spill or other major emergency. In an oil spill situation, there is a risk that "no one will pay" for cleaning up the aftermath of the accident, he stressed. “As the shadow fleet continues to grow, it [the risk] will only become more acute,” Roppestad explained.
• Insurance data and ship records show that traders who opted out of IG's services rely on other mutual insurance companies, including those from Russia and the Middle East, writes FT. These tankers tend to be much older: nearly half of the ships without IG insurance were over 25 years old in 2020, according to the newspaper's Equasis marine vessel database.

Context. In December, the European embargo on offshore supplies of Russian oil and the price ceiling on crude oil from the Russian Federation came into force. On February 5, sea shipments of petroleum products also fell under restrictions, which caused additional difficulties with logistics.

• After the introduction of restrictions in December, Russia's budget revenues fell by 400 billion rubles compared to forecasts, and in January the budget deficit reached its worst level since at least 1998.
• To circumvent the sanctions, Moscow deployed a fleet of "shadow ships" capable of delivering oil from Russia after the introduction of the price ceiling. In February, the FT estimated the size of Russia's "shadow fleet" at about 100 vessels.