Fourteen cargoes of fuel arrived at EU ports from refineries that use Russian crude oil in March, despite the bloc introducing sanctions prohibiting such transactions, researchers have found.
Since January this year, EU buyers of refined fuel have been required to provide evidence that cargoes were not produced using Russian crude, part of efforts to close a so-called refining loophole that has long drawn criticism for its role in funding Russia’s military activity in Ukraine.
However, in March, ports in eight member states received shipments from refineries in Georgia, India and Turkey that are continuing to import oil from Russia, according to the Centre for Research on Energy and Clean Air (CREA), an independent research organisation.
A cargo of gasoil that arrived at Burgas in Bulgaria on March 1 was produced at Georgia’s Kulevi refinery, which uses 100% Russian crude feedstock, CREA analyst Luke Wickenden told GTR.
A total of nine shipments arrived in the EU from Turkey’s Tüpraş İzmit Refinery and Star Refinery, which rely on Russian crude for 74% and 64% of input, respectively. Deliveries were made to Belgium, Bulgaria, Cyprus, France, Ireland and Italy, CREA found.
France, Germany, Italy and the Netherlands also imported four gasoil cargoes from India’s Jamnagar Refinery, which CREA said uses Russian crude for 12% of its feedstock.
Jamnagar’s operating company, Reliance Industries, has previously said it uses Russian crude in refining facilities that serve the domestic market, but not those that export fuel internationally.
But while the EU’s sanctions guidance provides leeway for imports from refineries that can prove they segregate crude from different sources, Wickenden said it is “not clear how this proof statement is supplied to importers”.
The research organisation urged enforcement agencies to “investigate shipments of oil products imported from refineries that run on Russian crude to prevent Russian oil molecules from entering the bloc, which would violate the EU’s recently implemented ban”.
Russia’s oil earnings soar
The findings come as Russia’s fossil fuel export revenues grew by 52% month-on-month in March, reaching an average of €713mn per day. Seaborne crude revenues more than doubled, CREA said in a report published on April 13.
The research estimated the Russian government earned around €7.4bn in tax revenue from this activity.
The surge in earnings was driven by attacks on Gulf energy infrastructure and the steep drop in traffic through the Strait of Hormuz, which caused Urals crude prices to almost double compared to the three months prior.
At the same time, volumes of seaborne crude exports increased by nearly 30% month-on-month, helped in part by a temporary sanctions waiver issued by the US government.
The report found the Philippines, Hong Kong and Singapore each bought cargoes from Russia for the first time since its 2022 invasion of Ukraine.
The increase in Russian seaborne oil exports presents several risks to western companies, the report said. For transactions involving western banks, traders or insurers, one risk is exposure to evasion of the G7-wide price cap, which prevents them from facilitating trades unless the oil is priced below US$44.10 per barrel.
The report said attestation fraud – where traders forge documentation to suggest they are in compliance with the cap – is a “key enabler of non-compliance”.
“The majority of Russian crude oil is currently being traded by opaque entities located outside price cap coalition countries – such as the United Arab Emirates and Hong Kong,” it said.
“These traders can fraudulently underreport the price that they paid to attain western maritime services for the transport of Russian oil.”
It recommended authorities consider requiring insurers and commodity traders to obtain a verified bank statement showing oil was traded below the cap, rather than rely on documents produced by other traders.
Another risk is that of the 400 vessels used to export Russian crude oil and refined products in March, 150 are considered ‘shadow’ vessels. Of those, more than a third are over 20 years old.
These tankers “pose environmental and financial risks due to their age, poor maintenance, and inadequate protection and indemnity insurance”, CREA warned.
“In the event of an oil spill or accident, coastal states may face significant cleanup costs and damage to their marine ecosystems.”
It called on G7+ nations to ban ship-to-ship transfers of Russian oil in their territorial waters, which are considered particularly high risk. The organisation found an estimated €181mn-worth of Russian oil was transferred between vessels in EU waters last month.
