Georgia has long been suspected of being a major transit country for European sanctioned goods travelling to Russia, but now it appears the trade is flowing in the other direction: Georgia has become a major backdoor into the EU for Russia’s sanctioned oil, economist and Caucasus University professor Vakhtang Partsvania said in a note published in Riddle on June 22.

The twin oil sanctions imposed by the EU at the end of 2022 on December 5 2022 and February 5, 2023 were designed to curb the Kremlin’s revenues following its full-scale invasion of Ukraine. But despite increasingly sophisticated enforcement mechanisms, new logistical loopholes are enabling Russian-origin oil and petroleum products to reach Europe via third countries, according Partsvania.

“While much attention is focused on preventing the import of sanctioned goods into Russia,” Partsvania wrote in Riddle, “less visible—but equally concerning—is the reverse flow: sanctioned Russian commodities entering Western markets under false labels.”

Georgia’s rising oil exports, a country that has tiny oil deposits, have raised red flags. Between 2022 and 2024, the country exported 275,000 tonnes of oil and petroleum products—more than four times the total from 2019 to 2021. Exports to EU member states rose to 104,000 tonnes, despite Georgia producing only 35,000–40,000 tonnes annually (700 barrels a day) , according to data from Georgia's State Agency of Oil and Gas, and importing most of its 1.5mn-ton domestic demand.

Partsvania noted that Russia remains Georgia’s primary supplier, with volumes increasing from 225,000 tonnes in 2021 to 771,000 tonnes in 2023. “The discrepancy between domestic production, import sources, and export figures strongly suggests that Georgia is acting as a re-exporter of Russian-origin oil,” he said.

Despite the twin sanctions, the EU continues to import significant amounts of Russian oil products, which are refined in third countries and relabelled – a dodge that is widely ignored because of the difficulties in sourcing sufficient genuine “non-Russia” oil.

In 2023, countries sanctioning Russia imported petroleum products made from Russian oil worth nearly €8.5bn, according to CREA.

"This CREA analysis has found that in 2023, there was a 44% year-on-year increase in sanctioning countries’ imports of oil products, by volume, estimated as being produced from Russian crude. The analysis shows that EUR 8.5 bn of price cap coalition countries’ imports of oil products between December 2022 and December 2023, were made from Russian crude. These imports in a 13 month period are equivalent to 68% of the EU’s annual commitment to aid Ukraine between 2024 and the end of 2027," CREA found. 

Supplies from countries like India, China, Turkey, and the UAE grew by an average of 44% compared to 2022. India, for instance, imports about 1.8mn barrels of Russian oil daily and exports billions in petroleum products to Europe and the US from India’s Vadinar refinery (Gujarat), supplied by sanctioned Rosneft. Some $135mn in petroleum products were shipped to the US between January 2024 and January 2025 from India.

“Georgia’s case differs. The country lacks refining capacities, with the first refinery not planned until 2028. Thus, oil and petroleum products exported from Georgia undergo no significant technological changes and are largely re-exports of Russian energy resources,” says Partsvania.

A recent investigation by Georgian research group iFact revealed that Russian oil is being disguised as Georgian through document substitution, registration with local companies, or minimal blending with domestic materials. “These procedures allow the cargo to bypass sanctions, particularly when end users do not verify the true origin,” Partsvania explained.

This practice carries significant risks. “Georgia’s role in these schemes could result in secondary sanctions, classification as a high-compliance-risk jurisdiction, and damage to EU integration efforts,” Partsvania warned. In addition, the US may impose the “bone crushing” tariffs suggested by Senator Lindsey Graham—up to 500%—on imports from countries continuing to trade in Russian oil.

Unlike countries such as India or the UAE, which have refining capacity and can legally reclassify products, Georgia lacks this infrastructure. “No industrial transformation occurs,” Partsvania said. “Georgia provides logistical and legal cover, not added value.”

Similar schemes exist elsewhere. Partsvania pointed to Turkey, where over 5mn tonnes of Russian-origin petroleum products were shipped through non-refining ports to the EU between February 2023 and February 2024. “These routes demonstrate a broader trend: the creation of parallel trade corridors to mask the origin of Russian commodities and circumvent sanctions,” he said.

Such patterns, Partsvania concluded, highlight both the adaptability of sanctions evaders and the pressing need for improved enforcement and verification mechanisms within Western economies.