Europe aims to collect information on Russian tankers rather than seizure: NorthStandard

European countries' insurance inspection scheme targeting Russian shadow fleet in Northwest European waters could help collect information for future sanctions, but any seizure of ship is unlikely under international maritime law, senior insurance officials at NorthStandard said Jan. 27.

In December, Denmark, Estonia, Finland, Sweden, Poland, the UK and six other countries said they would request proof of insurance from tankers laden with Russian oil suspected to be circumventing the G7 price cap regime to reduce safety and environmental risks.

NorthStandard officials, whose organization is one of the largest providers of third-party liabilities coverage to shipowners, suggested in a press event that those countries are likely aiming to find more intelligence on Russian oil trades rather than disrupt them.

"You can well see that one of the consequences may be additional ships being sanctioned," said March Church, head of sanctions advice at the insurer, adding that insurers covering tankers deemed to be involved in sanctioned trades could also be blacklisted.

The UK government, which has the authority to regulate the world's largest marine insurance market, has sanctioned a ship refusing to provide insurance details when it passed through the English Channel while imposing sanctions on some Russian insurers including Ingosstrakh and Alfastrakhovanie.

Since its invasion of Ukraine in February 2022, Russia has amassed a large tanker fleet operated by state interests and opaque, little-known firms to bypass Western sanctions, including the G7 price cap regime, and most of them were aged tankers without Western insurance or not covered at all.

While any oil spill incident related to the ships could cost $1 billion to clean up, European governments have little power to prevent their passage due to the 1982 United Nations Convention on the Law of the Sea that protects freedom of navigation, according to the officials.

"We're not restricting the rights of vessels to transit ... [We are] asking them to provide the details of what their insurance is," said Mike Salthouse, NorthStandard's head of external affairs.

The European countries have stated tankers would be checked in the English Channel, the Great Belt of the Danish Straits, the Sound between Denmark and Sweden, and the Gulf of Finland, which are the chokepoints of Russian exports from the Baltic. Oil transit volumes exceeded 5 million b/d in the Danish Straits last year, according to S&P Global Commodities at Sea(opens in a new tab).

US sanctions

Separately, the NorthStandard officials suggested the US could be more likely to target EU companies for violating sanctions under President Donald Trump due to his willingness to pursue different diplomatic interests from traditional US allies.

Observers said the previous Biden administration has generally avoid imposing sanctions on companies based in other Western countries, with Cyprus' Lagosmarine being a notable exception for the alleged violation of price cap. But Trump had a record of sanctioning EU interests, including Greek tankers, during his first term in 2016-2020.

"If past performance is any indicator of what's going to come next ... you might expect there to be less reluctance to upset the allies," Salthouse said.

US sanctions on EU firms are more likely to occur in relations to Iran, Venezuela and China rather than Russia, where US and EU interests seem to align diplomatically for the moment, Church said. "I think it's more likely to happen on programs where the political goals are slightly different."