Russian cargoes offering shipowners a year’s worth of money for 30 days of work and huge wages to poach Russian-speaking staff are new realities in the tanker market swayed by war and sanctions.
Owners offered TradeWinds a look inside the new world that has created a gold rush in some circles more than two years on from Vladimir Putin’s troops first crossing the border into Ukraine.
Russian oil is almost exclusively lifted by the “grey” or “shadow” fleet numbering hundreds of ships, since the rising price of oil from last summer propelled the cost of barrels beyond price caps imposed by the G7 group of nations.
A Western tanker owner revealed how allegedly non-sanctioned Russian cargoes are being offered at huge rates, with the carrot of 12 months of income from a single job.
The shipowner explained: “And we just have, let’s say, an unfair competition situation in the markets where certain owners can make astronomical amounts.”
The high-ranking executive described being called up by a broker in Rotterdam: “It was like, ‘oh, we have this cargo going to Kaliningrad. And we see that your vessel will fit the dates perfectly’.”
The company was told it was a non-sanctioned cargo. Due diligence with insurers later showed the cargo was in fact subject to sanctions.
“The broker was really trying to reassure us in all ways possible that they did their due diligence and all is good. And so, it turned out that this was a sanctioned cargo,” the owner explained.
“The reason why I was chasing this, which naturally any business owner would do, is I saw that the duration of the voyage was about 30 days. But the income was about 365 days. Naturally you would be tempted.”
Cargo gobbled up
The executive said rival owners have succumbed to this temptation in some cases.
Two days later, another operator “gobbled up this cargo straight away and took it”.
“Owners are saying it’s incredibly unfair that good corporate citizens that stick to the rules are practically in a business sense penalised for doing so. And those that are doing this business are just making a fortune by doing so,” the tanker owner said.
One company told TradeWinds it had been carrying Ukrainian cargoes and earning half of what Russian trades were paying.
UK shipbroker Howe Robinson Partners quoted suezmax rates for liftings in the Russian Black Sea port of Novorossiysk for discharges in Italy at $47,037 per day on Friday, $8,000 more than the highest suezmax numbers on any other route.
Huge pay packets fuel poaching
Shipping Russian cargoes is still changing the way the tanker sector operates as companies grapple with Western sanctions and the G7 price cap.
TradeWinds is told staff involved in permitted and sanctioned trading are seeing wages soar amid strong demand for Russian-speaking employees to deal with the business.
One European tanker owner said it had lost two people to a Russian-trading rival because they spoke fluent Russian.
The staff members were helping the company with Ukrainian business, where Russian is spoken, but were lured elsewhere.
A company executive noted “astronomical wages” beginning to be paid ashore, because of the higher freight rates on offer and the need to compensate staff for the risks.
“They pay them such lavish amounts,” the source said. “They say: ‘We’re going to do exclusively Russian stuff. You need to speak Russian. You’re going to deal with a lot of problems — maybe not getting provisions, bunkers, this and that’, which is something that is well known.
“That does take place and makes their lives more difficult. But they navigate around it. They always find solutions.”
In the past two or three years, vessels engaged in Russian trades have painted over vessel funnels to remove their logos, and ship names have been repainted in “microscopically tiny” letters, a source said.
“So that you don’t understand which owner is doing what, right? The logo is gone. The ship name can barely be read,” the tanker owner added.
Tricks of the trade?
Another tanker company spokesperson told TradeWinds: “I believe these could well be tricks to hide what you may be doing when you are operating in illegal trade.”
And a third source said: “We have seen limited to no scrapping. The ships still exist and of course they are doing their best to find a new way to make business and try to maximise their profit.”
The European owner can understand the motivation after “10 or 12 years of horrible markets”.
“And now there is kind of this gold rush. So I cannot blame any of my colleagues in the industry,” he added.
“But at the end of the day, you know, they’re getting away with it and others cannot get away with it. I feel like something needs to be done.”
He said some rivals have been open about doing Russian business in private conversations because it is so lucrative. “So people are quite chill about it because some of it’s legal. But risky.”
He blamed Turkish and Greek shipowners in particular for fuelling the Ukraine war by carrying Russian exports.
TradeWinds has reported that sanctioned state crude carrier and LNG vessel owner Sovcomflot (SCF Group) revealed a massive profit for 2023 as Western measures against Russian exports boosted tanker rates.
Accounts posted to the Russian-language section of its website showed net earnings of $942m last year.
