Further Challenges Ahead for Russia’s LNG ‘Shadow Fleet’ as Panama Cancels Vessel Registrations

By Malte Humpert (gCaptain) –

Russia’s nascent LNG shadow fleet continues to encounter choppy waters. Following the de-flagging of several vessels by the island nation of Palau earlier this fall, Panama now followed suit. The world’s largest registry is pulling the registration of four LNGC newbuildings involved in Russia’s dark fleet activity.

All four vessels come with medium Arc4 ice classification making them especially valuable to Novatek’s Arctic operations. North Air, North Mountain, North Way, and North Sky were launched in 2023 and were expected to enter service with Russia’s Yamal LNG project this year. 

However, their potential for use with the country’s new flagship Arctic LNG 2 project prompted the U.S. to sanction all four 115,519 dwt vessels in September 2024. 
The vessels have remained largely inactive for weeks idling in the eastern Barents Sea inside Russian waters. Last week the U.S. State Department announced further measures against the vessels’ owners.

According to the Panama Maritime Authority (PMA), the process to cancel their registrations began more than a month ago on October 4. It makes use of a new executive decree passed last month allowing for expedited removal of vessels from the registry. 

U.S. sanctions revealed a complex nexus of ownerships connecting the vessels back to Russia and Novatek, the majority owner of the sanctioned Arctic LNG 2 project. 

A key entity is Novatek’s New Transshipment FZE, a UAE-based subsidiary. The company has popped up periodically in attempted transfers of other LNG carriers, including an alleged but ultimately aborted attempt to take ownership of a South Korean newbuilding Arc7 carrier in January 2024.

“If someone like Novatek is unable to charter white-listed vessel because the insurance company, the flag state or the shipowner do not want to be subject to sanctions, the client (in this case Novatek, via a shell company based in Dubai whose address is a hotel room) will buy or hire tankers from companies that will find complacent flag states. They will be insured (or not) by companies from other countries such as Russia or India. And the sleight of hand is complete,” explains Hervé Baudu, Arctic shipping expert and Chief Professor of Maritime Education at the French Maritime Academy (ENSM). 

“[The vessels’] owners allegedly sought to circumvent sanctions on the Arctic LNG 2 project through shell companies in third-country jurisdictions,” confirms the PMA in a statement.

“As the authority overseeing Panama’s Ship Registry, PMA continues to monitor its merchant fleet closely and assures the international maritime community that it will steadfastly defend national interests, taking decisive action to cancel any vessels misusing the Panamanian flag,” the Authority confirmed.

At least one other LNG shadow fleet vessel remains currently registered in Panama, the Equasis shipping information system suggests. Nova Energy (formerly New Energy) carried several cargoes of sanctioned LNG from the Arctic LNG 2 terminal. Following de-flagging by Palau the vessel’s records now indicate registration in Panama. 

The U.S sanctioned the vessel and its owner in early September 2024 for using “deceptive shipping practices, including shutting off its AIS, and loading cargo from the sanctioned Arctic LNG 2 project.” 

The vessel has since loaded additional LNG at the project and currently remains at anchor in Nakhodka Bay in Russia’s Far East, likely due to the inability to find a buyer for its cargo.

The current registration status of three other formerly Palau-registered carriers, Pioneer, Asya Energy and Metagas Everest (formerly Everest Energy) remains unknown according to Equasis. 

“It is very easy to change flags (‘de-flagging’), and this is a fairly common practice for escaping the controls of port authorities. All you need to do is find a country where the shipowner, often a shell company or holding company, can negotiate a mutually beneficial tax package with the authorities,” explains Baudu further. 

U.S sanctions have thus far proven highly effective in blocking the delivery of product from the Arctic LNG 2 project. A concerted effort, led by the U.S. State department has resulted in almost a dozen rounds of measures specifically targeting vessels, their owners, and suppliers. 

With the upcoming administration change in Washington DC, industry analysts suggest that the pace of new efforts may slow down, though most are in agreement that existing sanctions will likely remain in place. Their expeditious enforcement, e.g. also through cooperation with foreign registries, could, however, become a different matter.

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