Dark waters: the environmental cost of Russian oil

Back in February 2024 we discussed the "shadow fleet" of often decrepit and uninsured ships that transport sanctioned Russian oil through the Danish Strait: a "ticking environmental bomb that sails Danish waters every day", as Mads Lorenzen and Kresten Andersen wrote in Finans. 

Now, as part of their ongoing North Sea Investigations, Follow The Money, an independent platform for investigative journalism based in Amsterdam, has published two big stories on the "ramshackle oil tankers that threaten Europe with environmental disaster".

Working with Global Fishing Watch and the Kyiv School of Economics Institute, Jesse Pinster and Dimitri Tokmetzis provide hard data on the number of ships concerned, their insurance status and their routes, in order to evaluate the risk to Europeans and their waters.

"Since the start of last year", they write, "Russian tankers have sailed through the Baltic Sea, past Northwestern Europe and along the coasts of the UK, France and Portugal almost 1,300 times. Almost all of those boats are heading into the Mediterranean on their way to Asia. That's an average of two to three such journeys a day. Some passed only once, others much more often. In total, FTM identified 410 different oil tankers carrying Russian oil along this route."

The fact that these vessels are all under- or un-insured means that Europeans would have to foot the bill if a catastrophe were to occur in European waters; and the fact that the majority of these vessels are over 20 years old means that the risk of catastrophe is elevated. "After 22 years", the authors explain, "an oil tanker normally ends up on the scrap heap".

Russia is using a variety of tricks and loopholes, including tax havens and shell companies, to circumvent the European Union's sanctions on Russian oil. In June of this year, "27 ships, including 18 oil tankers, were placed on the European sanctions list." This means that European ports and companies are forbidden from providing these ships with "crew, supplies or financial services such as insurance". 

As Pinster and Tokmetzis explain, the new sanctions have only been partly effective: "According to marine and energy researchers at the cargo tracking platform Vortexa, 30 percent of the sanctioned vessels stopped transporting Russian oil. But on six occasions, one of these sanctioned tankers was still able to sail unhindered along the North Sea. The oil tanker Kavya even entered Dutch, Danish and British territorial waters on 27 August, according to data from Global Fishing Watch." It should also be noted that 27 is a very small fraction of a fleet that is estimated to consist of around 600 ships in total. The authors conclude that the risk of catastrophe will remain high until European authorities can find a more effective way to crack down on the oil tankers.

---

---

For Follow The Money's second article on the Russian shadow fleet, Jesse Pinster talked with Copenhagen-based maritime security expert Jan Stockbruegger about the "monster" created by the EU and US price cap on Russian oil. For Stockbruegger, the price cap, introduced in 2022, is an ineffective half-solution, designed to punish the Kremlin without upending the global economy: "Russian oil is a ‘I cannot live with it, I cannot live without it’ problem. We cannot live with it because it finances Russia's war in Ukraine. But we cannot live without it because it's so important for the global economy. This is the dilemma."

As Stockbruegger explains, the price cap's effectiveness is overhyped. While demand for Russian oil has certainly taken a hit, around 90 percent of this oil, with a lot of help from China and India, is still sold above the price cap. "Russia is losing money, but it’s not losing nearly as much as we thought it would be losing. The Kiev School of Economics (KSE) Institute has estimated that Russia’s monthly losses have dropped to 2.5 billion dollars from a peak of 8.4 billion in January 2023. So Russia's war economy is still working fine, at least in part because it can rely on oil exports to pay for its war against Ukraine."

Stockbruegger concludes that economic and political self-interest may have scuttled any genuinely effective sanctions: "If you take out Russian oil from the market… the energy crisis of two years ago would be kindergarten compared to what would happen then. We need Russian oil. And that might also be the reason why they’re not sanctioning any more vessels."

“Deep shit”

"We have for too long had the wrong agricultural policy in relation to taking care of our aquatic environment, and now we are in deep shit." This was the colourful response of Søren Egge Rasmussen, environment spokesperson for Denmark's eco-socialist party Enhedslisten, to a new report showing record levels of oxygen depletion in Danish waters. The report from the National Centre for Environment and Energy at Aarhus University has opposition politicians calling for stronger efforts to combat the "heartbreaking and severe" impact of intensive farming and its nitrogen emissions on water quality, as Marie Møller Munksgaard and Dorte Ipsen Boddum report for Altinget. In a separate article for the same outlet, Marie Møller Munksgaard provides the broader context for a situation that the report's senior adviser has called "an environmental disaster". 

As the European Environment Agency's latest report on European water quality suggests, the broader European context is hardly more encouraging. "Only 37 percent of Europe’s surface water bodies achieved 'good' or 'high' ecological status, under the EU’s Water Framework Directive, and only 29 percent achieved 'good' chemical status from 2015 to 2021", Leonie Carter writes in Politico Europe, summarising the EEA report. "While countries have managed to avoid a worsening of the state of EU waters, 'no overall improvement' has been detected since the last monitoring cycle. Their slow progress is, in part, down to 'insufficient funding and insufficient integration of environmental objectives in sectoral policies' ".