Western efforts are continuing to gain momentum to apply pressure and specifically to use economic levers to cut off the flow of funds which the West argues are being used to fund the war in Ukraine.
After last week’s move by the UK to launch its first sanctions targeting the shadow fleet used by Russia to circumvent UK and G7 sanctions and the oil trade, Liberia announced it would no longer authorize insurance coverage from Russia’s Ingosstrakh Insurance Company.
Last week in its wide range of sanctions, the UK included Ingosstrakh which has emerged as a leading provider of insurance covering everything from spills to collisions or other incidents for tankers. Previous efforts had blocked access to the leading insurance markets in the UK and Europe driving the tankers to seek coverage from Ingosstrakh.
In a Marine Advisory dated June 17, the Liberia Maritime Authority reports Ingosstrakh is “no longer authorized to issue certificates of insurance to any Liberian flagged vessel.” Known in the industry as the “blue card” it is a required document presented to ports and shipping authorities to demonstrate that a vessel has coverage.
Liberia noted that it recognizes the inconvenience and would establish a temporary grace period for vessels with insurance from Ingosstrakh. They have up to 90 days, or the expiration of their current policy, to obtain replacement insurance.
Bloomberg is reporting that it is a symbolic move. They believe only three vessels, none of which are tankers, are in the Liberian registry currently covered by Ingosstrakh. However, it is still a further demonstration of the efforts to increase the pressure and stands as a challenge to other major registries to follow suit.
Liberia is the largest registry by tonnage (over 257 million gross tons according to Clarksons) giving it a 16 percent share while Panama has the largest overall number of vessels and a 15 percent share by tonnage.
Liberia along with Panama were some of the registries used historically by Russia as well as some of the shadow fleet vessels. The U.S. has been pushing the registries to cancel shadow fleet vessels while Russian interests, including Sovcomflot, have been playing a “shell game” with the registries. Sovcomflot for example shifted tankers to Gabon and when they were designated with U.S. sanctions months later, the vessels were moved into the Russian registry, often with a different name.
The moves to block access to recognized insurance also present a further challenge, especially to ports around the world. Analysts said countries such as India will have to decide if they want to risk giving berthing permission to vessels covered by a designated insurer and risk an environmental disaster.
The UK highlighted the designation as part of a larger effort that they contend has “so far deprived Russia of over $400 billion (US$508 billion) worth of assets and revenues since February 2022.” Reuters reports at least a fifth of that is specifically from lost oil revenues.
Ingosstrakh has not responded to Liberia’s move but last week told Reuters the reasons for the UK action “remain unclear.” It argues it operates under all the international regulations and said it would seek clarification. They told Reuters they would consider the “possibility of legally contesting,” the sanctions.
The UK also followed the U.S. lead and listed four tankers as well as a ship manager. The U.S. has blocked numerous tankers, managers, and Sovcomflot, with allegations of repeated violations of the price cap on Russian oil. Many of the listed tankers have been sitting idle but still, there is a fleet with possibly as many as 850 tankers making up the shadow fleet transporting Russian as well as Iranian and Venezuelan oil despite the sanctions.
Other moves are reported to be under consideration. Denmark for months has been looking at ways of stopping the shadow fleet. Danish officials cite the dangers of an oil spill from the vessels operating along its coastline and in busy shipping channels often without insurance coverage.