As part of a package of new EU measures targeting Russian exports and revenues, Denmark may soon be tasked with inspecting the “shadow fleet” of tankers passing through the narrow Danish Straits, adding a new layer of friction to Russian oil exports from the Baltic.
About 60 per cent of Russia’s seaborne oil exports leave Primorsk, near St Petersburg, in the eastern Baltic. The volume of traffic is about three large tankers a day. To get from the Baltic Sea to the open sea, loaded crude oil tankers have to take the deep route through the Storebaelt (Great Belt). Denmark administers this busy waterway and DanPilot provides pilotage services. Tens of thousands of ships pass through the Great Belt every year, and the risks to shipping from the sharp bends, shoals and often poor visibility have been known for hundreds of years.
The straits are considered international shipping lanes, but because of the known dangers and the fact that the waterway is well within the 12-mile limit, Denmark, as the coastal state, has administrative control. Given the higher average age of the “shadow” tanker fleet serving Russian interests, there is an additional need to ensure adequate coverage of the risk of an oil spill.
The EU proposal would use Denmark’s authority to inspect and regulate tankers with questionable insurance in its own waters. Under G7 sanctions, Western insurers (the market-dominating International Group) are not allowed to cover Russian oil cargoes priced above $60 per barrel. Russian oil is almost universally traded above this price, and one method Russian exporters have used to circumvent the cap is to use insurance from less established insurers based outside the G7.
For cargoes from the Baltic, these suspect insurance arrangements could be scrutinised by Danish authorities in the future, and could be grounds for delaying or detaining non-compliant tankers. “The key is to enforce the insurance rules,” an EU official told the FT. “It’s very patchy at the moment.”
According to the FT, the EU may also consider targeting flag states that provide registration services to ships in the “shadow fleet”.
However, there is no mention of Danish inspections or Russian tankers in the new EU sanctions package, and Russian tankers will not be targeted.
