Oil vessels suspected of being used by Russia to circumvent Western sanctions are sailing on insurance policies that provide no cover at all if the vessel is caught breaking the same sanctions.

This puts coastal states across Europe – and Denmark in particular – at risk of serious marine environmental disasters and hugely expensive clean-ups in the event of an accident and oil spill.

Danwatch and the Financial Times have obtained leaked documents showing that vessels from the so-called dark fleet sail on insurance policies from the Russian company Ingosstrakh, which has a “sanctions clause” in its contracts.

This could mean that in the event of an environmental disaster, the insurance company will cancel coverage on the old, worn-out vessels.

As the purpose of the dark fleet is to break the sanctions, the insurance contracts can therefore be “meaningless”, according to chief analyst at Lloyd’s List Intelligence, Michelle Bockmann.

“This poses serious environmental and safety risks in hubs where Russian oil is shipped, such as Danish waters and the English Channel, which are international routes these tankers pass through daily,” she says.

The coalition behind the sanctions, the G7 countries, the EU and Australia, have tried to curb Russian oil profits by imposing a price cap of USD 60 per barrel in response to the Russian invasion of Ukraine. At the same time, insurance companies and shipping companies in the West are required not to support oil trades that exceed the price cap.

The sanctions came into effect in 2023, and in response, Russia built a fleet of shady oil vessels called the Dark Fleet. It consists of old and often dilapidated tankers whose true owners are unknown, and they stay away from Western service providers and insurance companies to be able to breach Western sanctions.

However, under international law, ships still need insurance to carry the oil on the crucial route from the Baltic Sea to India, which has become a major importer of Russian oil.

Danwatch and the Financial Times’ investigation shows that a number of dark fleet tankers have been issued insurance papers by Ingosstrakh. The Russian company says in a written response to us that they will always reserve the right to cancel insurance contracts that in any way expose Ingosstrakh to “sanctions or damage to our reputation”.

“Ingosstrakh does not tolerate this type of behaviour,” says a company spokesperson. Therefore, the company will act like “any other international company” if one of its customers breaches the price cap, the spokesperson says.

The Danish hub

On the route from the Baltic Sea to new customers in India, there is one hub for all Russian tanker traffic: the Great Belt. According to Philip Max Cossen, Associate Professor at the SIMAC Institute, this puts Danish straits at risk of “accidents and oil spill incidents” due to the high volume of traffic.

“Denmark’s maritime territory is strategically important for international maritime traffic, and numerous ships pass through our straits every day,” says Philip Max Cossen.

Ingosstrakh says they understand the concerns about the lack of coverage, but states that they believe it is an industry-wide problem as a consequence of the heavy sanctions on tankers involved in the Russian oil trade.

Foreign Minister Lars Løkke Rasmussen (M) tells Danwatch and the Financial Times that he is “deeply concerned” about the activities of the dark fleet in Denmark.

“I would like to make it clear that in my view it is deeply problematic if these tankers help circumvent the sanctions and sail without adequate insurance,” he says and adds:

“Denmark is working hard through the EU to take action against Russian circumvention of sanctions, and we are deeply concerned about the so-called dark fleet. Therefore, Denmark is also open to further EU action against the dark fleet, and we will take your information into account in our further work.”

It has almost gone wrong before.

When the dark fleet vessel Canis Power suffered an engine failure near Langeland in May 2023, Danish authorities had to board the vessel while other oil tankers narrowly sailed between the Canis Power and the coast a few hundred metres away. The vessel was stationary for six hours.

Inspection data from Russia shows that an official inspection shortly afterwards found 11 faults in the vessel, with the largest being in its tanks, emergency systems and fire extinguishing system.

A similar case was the dark fleet vessel Varvara, which in December 2023 experienced engine problems in Oresund for several hours shortly before sailing on through Denmark and past Kronborg.

An inspection of Varvara a few months earlier revealed 17 faults on the vessel.

At the same time, in a report from 24 January, the Danish National Audit Office (Rigsrevisionen) assesses that the Danish authorities’ competencies to handle an oil spill at sea are “very unsatisfactory“.

Dark fleet vessels and Indian shopping centres

The large international insurance companies usually have search engines where you can find an overview of vessels with their insurance. However, if you look in Ingosstrakh’s database, it is not possible to search for any vessels.

Ingosstrakh will now “consult with their IT department” about the flawed database, they say.

But the leaked documents in the possession of Danwatch and the Financial Times show that Ingosstrakh insures, among other things, the oil vessel Naxos, which sailed from the Russian oil port Primorsk to India on 14 December. Naxos’ cargo has been identified by Kpler as oil from the Russian state company Rosneft.

At the same time, Russian export data shows that all sales from Rosneft in the weeks around 14 December were sold at over USD 60 per barrel – and therefore in violation of the price cap. In practice, this would mean that Naxos’ insurance would not apply.

The Panama-flagged Naxos is a 17-year-old tanker that has been used by Russia’s dark fleet since late 2022. Inspection data from Russia shows that during the latest inspection, five faults were recorded on Naxos – most notably in the vessel’s fire extinguishing and fire safety systems, which are designed to protect the vessel from accidents.

Naxos started out as part of the so-called “Gatik” fleet, which became known in the media for operating more than 60 tankers involved in trading sanctioned Russian oil while headquartered in an Indian shopping centre.

Gatik was subsequently dissolved after receiving extensive media attention, and therefore Naxos no longer sails as part of Gatik’s fleet – but instead now sails for the “Caishan” fleet, which according to Lloyd’s List Intelligence is connected to Gatik.

Financial Times and Danwatch have tried to get a comment from Caishan, but it has not been possible. Naxos is also still owned by the same company in the Marshall Islands that owned the vessel when it sailed for Gatik.

Ingosstrakh states that they “will look into the matter” but that “an investigation will take some time”.

No control from flag state

When a vessel like Naxos gets its insurance papers issued, it is through its flag state – in this case Panama – and it is also up to the flag state to make sure that the insurance company actually has the ability to cover for a potential oil spill.

“It ensures the outside world that there is coverage if there is an accident. Without an insurance certificate, there is no guarantee that they can pay for the damage caused by the ship,” says Philip Max Cossen.

In addition to Panama, many dark fleet vessels sail under the flags of Palau, Cook Islands and Gabon, which, according to international studies, are flag states known for lack of control. In Gabon’s case, 99 per cent of all tankers under their flag carry Russian oil, says Michelle Bockmann from Lloyd’s List Intelligence.

At the same time, she is critical of the controls from the authorities in the flag states:

“My cat could probably flag a ship in any of these countries’ registries using false or fraudulent information that would not be scrutinised, apart from a superficial check to ensure it does not appear on any UN list.”

However, it is a legal requirement to have a valid certificate if you want to sail through Denmark or the English Channel, for example. And the requirement for a valid certificate could prove to be a big problem for the dark fleet.

“I am very sceptical about whether there is coverage on these Ingosstrakh insurance policies. If the vessels or the oil are sanctioned, then there is probably no coverage. You are not allowed to provide services, insurance or otherwise, to ships carrying sanctioned cargo,” says Philip Max Cossen.

If the vessels sail with invalid insurance from Ingosstrakh, Denmark and England could in principle try to deny them permission to sail through our waters, he says. Because in that case, the ships could be in breach of international law.

“If the cargo is sanctioned, then they have sailed illegally. Then they are not allowed to sail. It must be a valid certificate,” says Philip Max Cossen.

Kristina Siig, Professor of Maritime Law at the University of Southern Denmark, has worked extensively with the dark fleet and how it operates within Danish and European law. She believes that it is very complicated and difficult to stop the vessels from sailing in Danish waters.

“If we could say with certainty that this vessel is sailing without insurance, it might be easier for us to do something about it. But in principle, it does have insurance, even though there is this clause,” she says.

Because in reality, the insurance applies as long as the vessels are not caught breaking the sanctions. Nevertheless, she believes that “there is room to do something”, even though new initiatives at the insurance companies “have not been tested”.

According to the current rules in Denmark, it is not allowed to stop ships from sailing through Denmark depending on which insurance company the ships sail with, says Kristina Siig. But she adds:

“You can decide for yourself what you want to try in order to do something about this.”

Sanctioned vessels treading water

On 18 January this year, 18 tankers were sanctioned by the US sanctions authority, OFAC, for violating the price cap.

According to Lloyd’s List Intelligence, these vessels were also insured by Ingosstrakh, who have since confirmed that they are no longer insured with them. Almost all 18 vessels are now trapped at sea because no one wants to touch either the uninsured vessels or their oil cargo.

Craig Kennedy, an expert on Russian oil at Havard University’s Davis Center, believes that the vessels’ sudden doldrums are due to the fact that, firstly, it is no longer possible to use them to trade oil in dollars due to the sanctions.

But at the same time, it seems that the lack of insurance means that no one will let them into port – not even to pick up the precious oil cargo.

“If OFAC sanctions a tanker, it becomes toxic. No one wants to risk their access to the dollar by trading with a sanctioned tanker. Ingosstrakh’s cancellation of their insurance is another nail in the coffin,” he says.

Indian and Chinese ports are not willing to bear the risk of letting the loaded oil ships into port when they are not insured, Kennedy believes.

Michelle Bockmann agrees, saying that the vessels “haven’t traded since and most of them are now anchored around the world.”

This may be why recent US sanctions against specific tankers have proven to be surprisingly effective in stopping sanction-breaching trade altogether.

In November 2023, the Financial Times reported that the EU would try to pressure Denmark to introduce controls on vessels carrying Russian oil bound for the North Sea.

This caused a great deal of debate because experts questioned whether it was feasible. On the one hand, vessels have the right to sail through Denmark according to the Copenhagen Treaty. On the other hand, others believe that Denmark is well within its rights to demand insurance documents, for example.