Russia's shadow fleet may have sabotaged power cables in the Baltic Sea. But what is it?

By Lewis Wiseman, ABC

The spotlight has been shone on Russia's "shadow fleet" following the alleged intentional cutting of underwater power cables in the Baltic Sea near Finland.

Vladimir Putin has a collection of hundreds of rusting tankers covertly carrying Russian crude oil around the world, according to the European Union (EU).

Russia's use of off-the-books ships began shortly after the EU placed sanctions on the country following the 2022 invasion of Ukraine.

That shadow fleet is now being used to evade those sanctions and generate revenue to fuel Russia's war, the EU claims.

Ukraine's President Volodymyr Zelensky wants the fleet stopped, as does the EU.

But data from the Kyiv-based KSE Institute shows Russia is increasing its use of the shadow fleet.

Here's what we know.

What is Russia's shadow fleet?

Russia's shadow fleet consists of aging vessels with obscure ownership acquired to evade Western sanctions amid the war in Ukraine.

The exact number of shadow vessels remains unknown, however, S&P Global estimates there are 591 shadow fleet tankers operating in the Russian oil trade.

The fleet flies the flags of various countries and employs a variety of murky tactics to conceal the origins of its cargo.

The top five flags of Russia's shadow fleet vessels are Panama, accounting for 17.3 percent, Liberia with 12.4 percent, Russia with 11.4 percent, Marshall Islands with 8.4 percent and Malta with 6.4 percent.

Of the remaining 44 percent of vessels, flags include the Cook Islands, Gabon, Liberia, Cameroon, Palau, Azerbaijan, Vietnam, China and more.

The EU believes nearly all the ships in the fleet lack Western insurance and are owned by companies operating outside the EU.

Approximately 44 percent of Russia's shadow fleet is owned and managed by companies from the United Arab Emirates, according to the KSE Institute.

Economists at the KSE Institute believe Russia's shadow fleet allows it to evade the price cap for a large share of its oil exports.

In September 2024, 92 percent of seaborne crude oil was transported without the involvement of EU services, allowing Russia to generate close to $US8 billion (NZ$14 billion) in extra earnings from January 2024.

What happened in Finland?

In December, Finland's coastguard seized an oil tanker flying a Cook Islands flag that they suspected cut through underwater cables in the Baltic Sea.

The ship, Eagle S, was part of Russia's shadow fleet, according to Finnish police, and had embarked from a Russian port shortly before the incident.

Russia said Finland's seizure of the ship was of little concern to it and denied involvement in any of the previous Baltic infrastructure damage incidents.

In the investigation, Finland said it had found anchor drag marks on the seabed and it was an "aggravated interference of communications".

Finland believes the incident was a Russian "sabotage" attack and has launched a criminal investigation.

Where is the oil going?

China, India, Turkey, Brazil, Singapore, United Arab Emirates, Saudi Arabia, Malaysia, Libya and Taiwan make up the top 10 destinations for Russian oil shipped on the shadow fleet.

India, China and Turkey are the top three on the list, with the trio accounting for 95 percent of Russian crude oil exports, the KSE Institute said.

"India and China remain Russia's top crude buyers, while Russian diesel goes to Turkey, Brazil and to a lesser extent north and west Africa," said Mary Melton, freight analyst at Vortexa.

She added that "there has not been much change" in trading patterns since the sanctions took hold following the invasion of Ukraine.

Data from the KSE Institute shows Russia's use of the shadow fleet in transporting crude oil and petroleum-based products has gone up since the invasion in 2022.

Russia has taken things to "another level"

The use of shadow fleets is not a new idea - countries such as Iran, North Korea and Venezuela have used the tactic in the past.

In December last year, the Biden administration ramped up sanctions on what it called Iran's shadow fleet, targeting 35 entities and vessels it said carried illicit Iranian petroleum to foreign markets.

However, since the imposition of the EU sanctions following its invasion of Ukraine, Russia has "taken the use of the shadow fleet to another level", the EU said.

The International Maritime Organization (IMO) officially defined the term "shadow fleet" in December 2023.

"[The IMO Assembly] decides that for the purpose of this resolution, 'dark fleet' or 'shadow fleet' means ships that are engaged in illegal operations for the purposes of circumventing sanctions, evading compliance with safety or environmental regulations, avoiding insurance costs or engaging in other illegal activities," it said.

The criteria for a shadow fleet include vessels carrying out unsafe operations, intentionally avoiding control inspections and not maintaining adequate liability insurance.

It also covers ships intentionally taking measures to avoid detection, such as switching off their AIS (automatic identification system).

The EU said Russia has done all of those throughout its operation of a shadow fleet.

'This fleet must be stopped'

In October 2024, the European Parliament held a debate on EU actions against the Russian shadow fleet and on ensuring full enforcement of sanctions against Russia.

The commission is preparing a 16th package of sanctions that is expected to take hold in January.

EU sources said the new sanctions could include wider measures on Russian liquefied natural gas and export limits.

Ukraine's President Volodymyr Zelensky appealed to allies in December to ensure the shadow fleet of vessels used by Russia no longer operated in European waters.

Zelensky posted on X that the fleet should be limited "not just with sanctions, but in other ways too".

"This fleet is one of the biggest threats," he said.

The Ukrainian leader added that: "Putin uses these tankers to finance his war.

"There are much larger and more dangerous Russian tankers operating in your seas," he said.

"This fleet must be stopped."

- ABC