Putin is using Spain to sell Russian oil

by Lorraine Williamson
Russian oil

 

MADRID – The new world, created by Vladimir Putin’s invasion of Ukraine, has given rise to a new oil trading centre: the city of Ceuta, a small Spanish enclave located in a privileged spot in the Mediterranean. 

The sanctions imposed by Western countries on Russia are transforming part of international trade. Consequently, Russian companies are trying to maintain their exports. Therefore, they have to find new trading partners and reshape export routes to avoid sanctions. 

In the case of oil, Russia has leased and purchased a significant number of small ships to transport the crude oil they produce. Most major shipping companies belong to Western companies that refuse or are unable to transport crude oil of Russian origin. However, the Kremlin has found a solution for that. 

The Spanish city of just 85,000inhabitants on Africa’s northern coast has become a key hub for the operations of Russia’s “ghost fleet”. Through Ceuta’s waters, Russian ships transfer crude oil to other larger ships for transport to various ports around the world.  Especially in Asia. El Economista writes this based on a column by Javier Blas, an expert in raw materials and a columnist for Bloomberg. 

Oil moved from tanker to tanker 

The sea at Ceuta is calm and far from prying eyes. Therefore, Russia uses this to exchange oil between tankers. This technique allows the country to reduce shipping costs, bypass restrictions and simplify logistics for its remaining clients. 

The result? Russian oil continues to flow into the world market in large quantities (just below pre-war levels). This is despite US and EU sanctions. Even if the Kremlin has to sell its oil at a discount, it still sells a lot. 

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Increasingly routine 

Before the war, Moscow used small tankers to ship crude oil directly to European refineries. But now the Kremlin uses “the coasts of Ceuta” as a base for ship-to-ship transportation. Sporadically at first, but now, increasingly routinely. Russia and China in particular seem to be organising more exchange stops in Ceuta. Meanwhile, the US is putting pressure on China not to make it easier for Russia to export crude oil and to reduce its purchases. 

Russia seems to respect international law 

Moscow appears to be respecting international law so far, according to Bloomberg Terminal Tracking: Tankers largely stay 12 nautical miles off the coast. This is the limit of territorial waters. Although at times they appear to have approached Ceuta, in what Spain considers its territorial waters. 

However, there is a risk because most of the tankers that have visited Ceuta since December are old. The oldest was 26 years old. In human terms, that equates to a 70-year-old. Ownership is largely Russian and Chinese, and their insurance coverage is opaque at best. The risk of leakage is high. 

Javier Blas warns that Spain would do well to have its navy patrol the area to make sure nothing goes wrong. 

To date, Russian ships’ tricks to continue exporting the ‘forbidden oil’ seem to work in the waters around Ceuta. “Discount or no discount, every petrodollar counts for the Kremlin. Europe must pay attention to what happens at the front door,” said Blas. 

ASSSA

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