Palau Flag Suspends Russian LNG ‘Shadow’ Fleet Ships

By Ruth Liao and Stephen Stapczynski (Bloomberg) —

The Republic of Palau, an island nation in the Western Pacific, has temporarily suspended the registration of three liquefied natural gas carriers that were recently sanctioned by the US over links to Russian gas exports.

Authorities on the island, about 500 miles east of the Philippines, are investigating whether vessels violated sanctions through deceptive practices, the Palau International Ship Registry said in a statement Tuesday. The vessels — Asya Energy, Everest Energy and Pioneer — were sanctioned by the US Treasury’s Office of Foreign Assets Control on August 23. 

The sanctions imposed on seven LNG carriers linked to Russian gas exports from its newest plant, Arctic LNG 2, are a fresh blow to Russia as it spent months developing what is believed to be a shadow fleet of tankers for natural gas in a similar way it did for transporting crude oil and products. Such vessels have opaque ownership, unknown insurers and deploy practices such as hiding their location by switching off or manipulating their automatic identification systems.

Vessels must be flagged under a country to meet international maritime law and insurance requirements. Not having a flag would restrict a vessel’s movements, particularly through major canals, which require insurance and documentation, according to Richard Pratt, shipping consultant with Precision LNG.

The vessel sanctioning is an additional expansion by the US to target Russian energy exports after the US sanctioned the Arctic-based facility late last year.

“Attempts to operationalize the Arctic LNG 2 project will continue to be met with a swift US government response,” said Geoffrey Pyatt, the US State Department’s top energy official, in a statement. 

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