Russia Defies Sanctions as Shadow Fleet Resumes Arctic LNG 2 Exports

Arctic LNG 2 Resumes Operations

All eyes are on US-sanctioned Iris (IMO 9953523) and Russia’s Arctic LNG 2 terminal after the liquefied natural gas carrier loaded the first cargo from the plant in nearly nine months. The loading marks both a restart of operations at the flagship gas project and a renewed Russian commitment to using a shadow fleet of LNG carriers. All ships involved are sanctioned by the US, EU, UK, or, in the case of Iris, by all three.

This is the ninth cargo tracked from the Arctic LNG 2 project, which launched last year, and the first for 2025.

A Troubled Start for 2024 Cargoes

From August to October 2024, eight previous cargoes failed to find buyers. These volumes were either stored or transferred to floating storage units amid pressure from Western regulators, who swiftly imposed sanctions on the vessels used.

Iris epitomizes this pressure. It was blacklisted by the US Office of Foreign Asset Control (OFAC) in August 2024, by the UK in September, and by the EU in December. The carrier is beneficially owned by Sovcomflot, a Russian state-controlled shipowner, but has operated through a United Arab Emirates shelf company to mask corporate oversight. That shipmanager, Whitefox Ship Management, has also been sanctioned by OFAC and the UK.

Murmansk Transshipment Raises Questions

As per Windward tracking, the vessel is now docked at Murmansk, Russia, and is poised to transfer its cargo to a non-ice class vessel via a floating storage transshipment facility. This move could test buyers’ risk appetite: Will they accept cargo loaded from a sanctioned terminal and carrier if it’s delivered by a “clean” vessel?

With US scrutiny of Russia appearing to ease, the reluctance to receive sanctioned LNG may be softening.

New Tactics and Flagging Strategies

Unlike last summer, Iris did not engage in GNSS manipulation when loading on June 27. Additionally, Russia appears to be shifting tactics in how it flags vessels. Iris reflagged to Russia after being sanctioned, as have six other LNG carriers.

Russia is not using open registries to the same extent before lifting LNG. However, three vessels remain falsely flagged with Curacao, invalidating their insurance and safety certificates. Others are flagged with Singapore or Comoros.

Shadow Fleet Activity Persists

Four Russia-flagged LNG carriers are anchored less than a day’s sail from the terminal, suggesting they may be next to load. Several carriers in this fleet raise compliance red flags:

• Eight of the 15 LNG carriers have multiple dark activities
  
• Three have tampered with identification and location systems
  
• Seven have engaged in ship-to-ship transfers with sanctioned vessels
  

The resumption of Arctic LNG 2 exports via shadow fleet tactics underscores Russia’s continued defiance of Western sanctions and raises difficult questions for regulators and buyers alike.