The UK has introduced new sanctions targeting continued trade of Russian oil and gas, including shadow tanker fleet operators and the Arctic LNG 2 project, the Foreign Office said in a statement Feb. 22.
Among entities sanctioned in the new measures include Russian oil trader Niels Troost and his Geneva-based company Paramount Energy & Commodities SA, the activities of which facilitate “unfettered trade in Russian oil beyond the reach of the oil price cap,” the government said.
The UK first sanctioned Troost’s UAE-based company with near-identical name, known as “Paramount Energy & Commodities DMCC,” in November 2023, after it came under scrutiny for consistently trading above the $60/b price cap imposed on Russian crude by G7 countries in December 2022.
In a response to S&P Global Commodity Insights email, Paramount SA said that it “has acted at all times in line with all applicable laws and regulations. We intend to challenge this ill-conceived and incorrect measure.” However, Fractal Shipping was immediately not available for a comment.
Companies operating outside G7 jurisdictions are permitted to trade Russian oil above the price cap, but such activities beyond the reach of sanctions have cast doubt on the efficacy of Western measures aimed at crimping Moscow’s oil revenue while keeping the market well-supplied.
Other targets of the new UK sanctions include shipping companies supporting “Fractal Marine DMCC, Beks Ship Management, and Active Shipping, which operate as part of Putin’s shadow fleet,” the Foreign Office statement said.
New measures target operations critical to Russia’s military effort and “malign Russian shipping activity,” the statement said, decrying activity for reducing the efficacy of existing sanctions.
S&P Global Commodity Insights reported previously that Fractal Shipping carried at least 44 million barrels of Russian-origin crude and oil products in 2023. It was one of the largest loaders of Russian crude and products after the EU and the US imposed a $60/b cap on crude shipments in December 2022.
At its peak, Fractal Shipping was using 14 of its 28 ships to move Russian crude from the Baltic Sea to north China, CEO Mathieu Philippe told S&P Global in September, while outlining plans to expand the fleet to capitalize on opportunities in India, Turkey and the Persian Gulf.
“The Russian angle for us was purely opportunistic, but a very steep learning curve how to comply without restricting ourselves, without self-sanctioning ourselves, which is something we almost never do. But we have never crossed the line,” Phillipe said in September.
Arctic LNG 2 sanctions
Additionally, the UK announced that Novatek’s Arctic LNG 2, a project to make Russia a major LNG player in the Arctic, would become subject to sanctions, also targeting its director Oleg Vyacheslavovich Karpushin and six directors of majority owner PJSC Novatek.
The Arctic LNG 2 project, already subject to US sanctions, is a three-train project with a total capacity of 19.8 million mt/year, with each train scheduled to launch in 2023, 2024 and 2026 respectively.
First exports from the facility are expected in the coming weeks, but US sanctions have reportedly led to delays in the loading of the first cargo.
The UK formally banned LNG imports from Russia as of Jan. 1, 2023, having already cut imports to just 0.37 million mt in 2022, compared with 2.45 million mt in 2021, according to S&P Global data.
There are no EU-wide sanctions on Russian gas or LNG imports, but the European Commission has said it wants to end gas and LNG imports from Russia by 2027.
UK gas prices showed little sign of uplift after the announcement, with the UK NBP month-ahead being priced at 56.84 pence/therm at 1630 GMT Feb. 22, down 3.4% on the day.
UK backs renewed support for Ukraine
Restrictions on Russian oil and gas trade comprise part of over 50 new sanctions announced by Foreign Secretary David Cameron Feb. 22, targeting individuals and businesses operating across multiple sectors, including munitions manufacturing, electronics and the diamond trade.
Coinciding with the two-year anniversary of Russia’s invasion of Ukraine, the measures underscore the UK’s support for Ukraine as its battle for independence has dragged on, Cameron said.
“Two years on, we stand united in support for Ukraine,” he said. “Our international economic pressure means Russia cannot afford this illegal invasion. Our sanctions are starving Putin of the resources he desperately needs to fund his struggling war.”
The minister is set to attend a special UN session dedicated to Ukraine in New York to mark the anniversary, where he is expected to meet Ukrainian Foreign Minister Dmytro Kuleba.
Source: Platts
