Tanker giants are springing up from nowhere to keep Russian oil moving Ship’s crew

By Elizabeth Low

3/18/2023 (Bloomberg) — Adhesive tape is peeling off a black door, the handle of which appears to have been ripped out, at an office building in downtown Mumbai. There’s a stack of mail on the floor outside. A guy from a neighboring office says the staff moved out a few weeks ago, destination unknown.

Nearly 1,200 miles away in Dubai, a small office in a run-down industrial area offers no indication that it is also a small cog in Russia’s vast new oil supply chain.

The two sites are listed in an international maritime database as owned by firms managing $2 billion in tanker assets between them. In less than a year they assembled fleets that are now shipping millions of barrels of Russian oil around the world.

The first address is a company called Gatik Ship Management in Mumbai. The second is for fractal shipping. They are part of a vast network of naval operations that rose to prominence shortly after the invasion of Ukraine and helped keep Russia’s oil exports essentially unscathed despite Western sanctions.

“It’s these new breeds of players in the tanker market that have helped keep Russian oil flowing around the world,” said Rebecca Galanopoulos Jones, senior content analyst at VesselsValue, a company that tracks prices on thousands of merchant vessels. “Sanctions on Russian oil appear to have had very little impact on overall export levels.”

Europe banned nearly all oil imports from Russia by sea from December 5, while joining the group of seven developed nations that introduced a price cap on the country’s crude oil sales. This extended to refined fuels on February 5.

Anyone wanting to access essential Western services — particularly insurance — had to provide certification that the cargoes they were transporting cost $60 a barrel or less. The cap was deliberately set high – the US already wanted reduced Russian crude to keep the flow going – and both up-and-coming shippers use plenty of western insurance.

Also Read: Russia Has Sold Oil Well Above Price Cap, Researchers Say

About three-quarters of Gatik’s fleet is covered by mutuals within the International Group of Protection and Indemnity Clubs in London, data compiled by Bloomberg shows. With fractal, the proportion is even higher.

Both companies have numerous vessels in their fleets covered by one of the International Group’s 13 member organizations, the American Club, headquartered in New York, according to industry data compiled by Bloomberg.

The American Club’s chief operating officer, Daniel Tadros, confirmed that his organization covers vessels in both firms’ fleets, adding that both have provided what are known as attestations — documented statements confirming oil purchases are in line with the G7 price cap .

The need for firms like Gatik and Fractal grew because many conventional Western shipping companies stopped lifting Russian barrels, either in protest of the invasion or because of the risk of running afoul of sanctions.

Even before action began, a large number of tankers were sold to a new group of buyers, whose identity and affiliation were often unclear.

Permitted Trading

There are no results searching for the company Gatik Ship Management on the Indian Ministry of Business Affairs website. A Gatik website address shows that it is under construction. The company declined to answer questions about its activities.

Fractal’s website only has an email address for recruitment. Emails, a WhatsApp message and a call requesting comment – to addresses and phone numbers of people known to Fractal officials – went unanswered.

Its Dubai address is listed on Equasis as the location for the commercial manager of most of Fractal’s tankers. The company also recently moved out of a shared workspace in Geneva — the location of its headquarters, according to a local executive.

Gatik’s fleet can carry about 30 million barrels of oil and fuels, according to Bloomberg. Fractal’s has a transport capacity of nearly 15 million barrels.

Almost all Fractal and Gatik tankers have called at Russian ports or transported Russian cargo via ship-to-ship transfers this year, according to tanker tracking data compiled by Bloomberg.

India and the United Arab Emirates have not joined the price cap, nor do they have any other sanctions against Russian oil. They can also legally use Western services provided they provide a certificate stating that the loads were purchased at or below the cap.

Russia serving

According to VesselsValue, a firm that oversees the sale and purchase of merchant vessels, Gatik’s earliest recorded tanker acquisition was in June 2022, the most recent being in February of this year. Fractal’s was in the same month, Equasis data shows.

One such example is the Gatik tanker Jumbo, which was spotted entering the port of Ust-Luga in Russia’s Baltic Sea on February 11. It is now near Kalamata in Greece, a popular spot for ship-to-ship cargo transfers for the nation’s oil, according to Bloomberg ship tracking. According to Equasis, the ship came under Gatik’s management on February 3.

Also Read: Russian Shadow Fleet Emerges from Data on Empty Oil Tankers

Russia exported about 3.2 million barrels a day of crude oil from its ports in the two months following the imposition of the cap and European import ban on December 5, little changed from the previous two months. The two companies are part of the new supply chain network that will make this possible.

Neither Gatik nor Fractal are listed as beneficial owners of the tankers in their fleets, meaning they likely operate the vessels for others, whose identities are often not made public. They are referred to on the American Club’s website as the “registered owners” of their ships.

This is a common form of ship ownership in the shipping industry, but does not indicate the true owner of the ship.

Beneficial ownership is a more important detail to understand who really owns the assets and according to information from IHS, which maintains a shipping database for the International Maritime Organisation.

“We’re seeing how easy it is to transfer ownership with these large, new groups,” Steve Cicala, co-director of the Economic Analysis of Regulation project at the National Bureau of Economic Research.

–With support from Rakesh Sharma, Julian Lee, Anthony Di Paola, Bryce Baschuk, Alex Longley and Hemal Savai.

© 2023 Bloomberg LP

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