The European Union has imposed sanctions on a Dubai-based manager of dozens of SCF Group tankers as part of wide-ranging measures to target revenue-raising arms of the Russian state.
The EU found that Sun Ship Management was a key company involved in transporting oil, which contributes to more than 70% of Russia’s energy revenue.
The sanctions notice listed Sun Ship and noted its links to parent company SCF Group and five directors.
“Sun Ship Management manages and operates a fleet of almost 100 oil, liquefied gas and chemical vessels with a capacity of more than 150,000 deadweight tonnage,” said the notice.
“Sun Ship Management is an entity involved in an economic sector providing a substantial source of revenue to the government of the Russian Federation.”
The notice published at the weekend included Russia’s shipbuilding players and Murmansk-based Atomflot, which maintains the country’s ice-breaker fleet.
The Northern Sea Route has emerged as a new strategic opportunity that will allow Russia to exploit the vast gas and oil reserves in the Arctic, said the EU.
“With oil and gas exports shifting from Europe to Asia as a result of Russia’s war of aggression against Ukraine and subsequent Western sanctions, Russia’s ice-breaker fleet is key to the country’s Arctic hydrocarbon strategy,” the notice said.
“In order to escort oil and gas tankers on the much longer and more challenging voyage from the Yamal and Gydan peninsulas to Asia, rather than the much shorter and less ice-infested route to Europe, Russia relies on Atomflot’s fleet of nuclear ice breakers.”
The EU, US, UK and Canada all imposed sanctions on SCF Group within a month of the Russian invasion of Ukraine on 24 February 2022.
Imposing sanctions on a Dubai-based unit is a significant move. Brokers have reported a noticeable shift in ship sales and broking activities from Europe to the United Arab Emirates following the invasion.
New shipowners have emerged in the UAE, which has been identified by the Financial Action Task Force, a global watchdog, as a high-risk country for illicit finance and money laundering.
Busting sanctions
The task force said on Friday that the UAE had made “significant progress” in dealing with financial threats and improving its record in tackling breaches of United Nations sanctions.
Sun Ship manages 92 tankers. Before the EU announcement, Cyprus said last week that it had removed its flag from tankers managed by Sun Ship.
Four of them were listed as operating under the Cypriot flag, according to the Equasis ownership database: the 172,600-cbm LNG carrier Christophe de Margerie (built 2016) and three 30,700-dwt product tankers, the RN Privodino (built 2010), RN Murmansk (built 2009) and RN Arkhangelsk (built 2008).
The Netherlands had promoted the move against Sun Ship, but questions were raised about whether it would be included in the 10th package of US sanctions despite reports of broad agreement for the measure.
The impact of the move may be limited; SCF Group said this month that no vessels managed by Sun Ship were carrying cargoes into the EU unless “expressly permitted” by EU regulations.
The sanctions already imposed meant that no Russia-flag vessels, or those that changed their flags after 24 February, could unload at EU ports.
EU bans on Russian seaborne oil imports and the price caps imposed by the G7 group of countries were designed to further limit Moscow’s revenue-raising opportunities.
“We will continue to increase pressure on Russia [for] as long as it takes,” said the EU’s foreign policy chief Josep Borrell.
In a statement earlier this month, SCF Group said that it and “all of its subsidiaries operate in line with all applicable national and international legislation”.
SCF Group has been approached for comment.
