Greek naval exercises to close its waters to Russia’s shadow fleet tankers

Greek naval exercises to close its waters to Russia’s shadow fleet tankers
Greece will hold extended naval military exercises that will close its waters to Russia's shadow fleet tankers that have been using the location to carry out ship-to-ship transfers of oil headed for markets in Asia. / bne IntelliNews
By Ben Aris in Berlin June 5, 2024

Greece launched its biggest and longest naval exercise ever, in the process limiting the movement of Russia’s shadow fleet in its waters, The Bell reported on June 5.

Russia has been using Greek waters to facilitate ship-to-ship (STS) oil transfers off the coast as part of its schemes to evade international sanctions. Russian ships don’t have to ask Greece permission to traverse its waters due to the international maritime law on the right of innocent passage. All ships of any state have a free and irreversible right under International Law to make “innocent passage” through the territorial waters of any state.

The exercise, announced on June 4, will take place in the Gulf of Laconia and last until July 15, following closely on the heels of a two-week exercise that just concluded, The Bell reports.

The exercise allows Greece to close its maritime space to civilian vessels, in one of the few exceptions to the right of innocent passage. As bne IntelliNews reported in an article on global chokepoints, Russia has been making use of the right of passage to sail its tankers through EU waters, including the narrow Danish exit from the Baltic Sea, the main Russian maritime export route, which are helpless to stop them. Using the navy to halt Russian tankers is a naval blockade and that is officially an act of war.

The Greek naval exercises will effectively temporarily ban Russian tankers from its waters and avoids provoking a crisis, preventing the tankers from using the area for STS oil transfers.

These transfers became a necessity for Russian oil companies after the European twin oil embargos introduced on December 5, 2022 and February 5, 2023, as they reoriented exports to Asia. Smaller Aframax or Suezmax tankers pick up oil from Russian ports in the Baltics and Black Sea and transfer it to larger VLCC class supertankers in the open Mediterranean Sea for the two month journey to buyers in China and India.

"Our goal is not to prepare for a naval war in the Mediterranean, but to enforce maritime safety and environmental protection," a Greek naval official said as cited by The Bell.

As Kyiv School of Economics (KSE) recently reported in its Russian Oil Tracker monitor, Russian oil export revenues surged to $17.2bn in March 2024, driven by higher global oil prices and unfettered seaborne exports that led to increased crude export volumes. KSE called for tougher sanctions to be imposed on Russia’s shadow tankers.

In December the US Office of Foreign Assets Control (OFAC) introduced smart sanctions that did effectively target 41 tankers and take them out of service, but OFAC has been reluctant to expand the sanctions to hit the estimated 300 tankers in Russia’s shadow fleet for fear of causing oil shortages that would lead to a price hike.

Separately, there are unconfirmed reports that the majority of these 41 sanctioned tankers have since been renamed and reflagged and are back in service, according to Chris Weafer, the founder and CEO of Macro Advisory and former head of research at multiple Moscow-based investment banks.

The International Maritime Organization has labelled STS transshipment a dangerous practice that undermines maritime safety and poses significant environmental risks.

The Greek exercises are likely to force Russian tankers to relocate their STS operations. Already, some transshipment activities have shifted to the east coast of Morocco, near the Spanish enclave of Melilla. This shift may prompt Spain to take action again, having previously expelled Russian tankers from the vicinity of its enclave of Ceuta.

If Greece continues its monthly naval exercises, it will put additional pressure on the shadow fleet, potentially leading to further relocations and increased scrutiny from other Mediterranean nations.