Page 116 - ΝΑΥΤΙΚΑ ΧΡΟΝΙΚΑ - ΜΑΙΟΣ 2024

GEOPOLITICS & SHIPPING

lition by surprise. The Parallel Fleet is comprised Many have now withdrawn from Scheme partici-
of vessels that are flagged, insured, classed, and pation altogether, understandably concerned about
financed in jurisdictions that are not subject to the credibility of the attestation, which the Scheme
Coalition sanctions. Nobody really knows its size, expects them to accept at face value. Consequently,
but some estimates suggest that, as of today, up unless the Coalition wishes to stop the participation
to 70% of Russian oil cargoes are being carried by of Coalition ships, it is difficult to reach any other
vessels whose owners and service providers are conclusion that those involved are doing their best
domiciled in jurisdictions not subject to the laws within the design imperfections of the Scheme.
of the Coalition States. Instead, enforcement should focus on those
Moreover, some States have expressed concern actively trading and transporting cargoes above
about the regulation of tankers comprising the Par- the $60 cap. There are a few choices available;
allel Fleet. One such vessel, the Pablo, suffered a firstly, the Coalition could simply ban vessels and
catastrophic explosion on 1 May 2023, killing one service providers subject to its jurisdiction from
person. It remains unclear how the vessel’s flag carrying Russian oil. The growth of the Parallel Fleet
state and insurers responded to the casualty and may now mean that there is sufficient capacity to
the resulting claims. ensure a continued supply of Russian oil to world
Finally, several influential commentators, including markets. Yet, such action would risk allowing Russia
the US Treasury Secretary Janet Yellen, have pub- to charge more for its oil and potentially influence
licly observed that the price cap is no longer work- those markets by controlling the amount of oil it
ing as planned. A World Bank Commodity report, supplies.
published in October 2023, observed a narrowing If the Scheme is to be maintained, then enforce-
of the gap between Brent and Urals trading prices ment action should be targeted at those responsi-
and further commented: ble for misrepresenting the true price of the cargo,
“The price cap on Russian crude oil introduced in specifically the seller, shipper, and buyer. This would
late 2022 appears increasingly unenforceable …. require new legislation expanding the scope of the
The cap has not created significant supply disrup- sanctions to apply to parties not subject to the
tions, with the volume of Russian oil production jurisdiction of the Coalition. Public designations
and exports remaining relatively constant, in part of parties involved in such shipments would help
reflecting the redirection of Russian exports from Coalition ships, and service providers avoid parties
EU and G7 countries to China, India, and Türkiye.… known to be in breach.
It seems that by putting together a “shadow fleet”, Finally, OFAC and OFSI should be encouraged to
Russia has been able to trade outside of the cap; adopt a less confrontational and more collabora-
the official Urals benchmark recently breached the tive approach to shipowners and service providers
cap for more than three months, averaging $80 per within their jurisdictions, the vast majority of which
barrel in August”. are simply trying to do the right thing. Coalition
shipowners have no interest in seeing lucrative busi-
What next? ness going to competitors who do not necessarily
None of this should come as a surprise. The Interna- go to the expense of maintaining their vessels to
tional Group repeatedly highlighted that shipown- the standard required of them by their oil-major
ers and their Tier III financial and service providers customers. Indeed, if the parallel fleet is allowed
have no means of accessing the actual price paid to grow unchecked, much of the last fifty years
for a cargo. As a result, they are entirely reliant on of work by the IMO to improve safety risks will be
the attestation provided to them, with no means of undermined.
verifying its accuracy.
So, what should the Coalition do next? During its first year of operation, the Price Cap
What it shouldn’t do is ramp up enforcement efforts Scheme enjoyed some success but now needs
against shipowners, flag states, class, and insurers to adapt if it is to remain an effective mechanism
currently engaging in good faith in price cap trades. to prevent Russia from profiting from its war of
Why focus enforcement on the section of shipping aggression in Ukraine. Enforcement action should
trying to make the unworkable work whilst ignoring be targeted at those who misstate or hide the true
the 70% or so of cargoes shipped on the Parallel price of Russian oil rather than those who have
Fleet? been misled by such statements. Finally, states
By and large, Coalition shipowners are doing should be encouraged to ensure that vessels trad-
their best to comply with the requirements of the ing to their shores or flying their flag comply fully
Scheme. However, even with the changes made to with the statutory requirements of the applicable
the text of the attestation, they have little means IMO conventions.
of verifying the price information contained in it.

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