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Affinity Policy Comment 6 February 2023

Chasing Shadows

Price caps on Russian products took effect on Sunday, with the G7, the EU and Australia agreeing on price limits of USD 100 per barrel on diesel and other products that trade at a premium to crude, and USD 45 per barrel for products that trade at a discount, such as fuel oil.

The price caps, together with an EU ban on Russian oil product imports, follow a USD 60 per barrel cap on Russian crude that G7 countries imposed on 5 December as they seek to limit Moscow's ability to fund its war in Ukraine.

There will be a 55-day transition period for seaborne Russian oil products bought and loaded before Sunday. The wind-down period for Russian crude oil was 45 days.

Both caps prohibit Western insurance, shipping and other companies from financing, insuring, trading, brokering or carrying cargoes of Russian crude and oil products unless they were bought at or below the set price caps.

Interestingly enough, last Friday, Bloomberg published in article in which it claims that “the ‘shadow fleet’ of ships that transport Russian oil around the world has expanded to around 600 tankers”.

While it might be easy to get carried away in condemning Russia’s actions and those who purchase Russian crude and product (even if Europe itself has been importing record volumes of Russian distillates until last Friday!), it is by no means illegal to carry Russia-origins fuel to countries outside the EU, provided owners and charterers abide by the latest regulations.

Hence why, stating that all the 600 ships that carry or carried Russian oil are part of the “shadow fleet”, which implies that they are all operating with disregard of the law is quite a misrepresentation, especially as Russian crudes have largely traded below or at the price cap levels since 5 December, and the fact that products sanctions became law only yesterday. After all, nowhere in the products sanctions regulations is it stated that they are retroactive.

Further in the article, the media outlet said that “about 400 crude oil vessels, or 20 per cent of the global fleet, have ‘switched’ from mainstream trades to ‘ostensibly do Russian business”, quoting Trafigura co-head of oil trading Ben Luckock in an interview on Bloomberg Television. For oil product tankers, the company sees the level at 200 tankers, or 7 per cent of the world total.

Again, there is quite a difference between doing “ostensibly Russian business” and breaking international sanctions in the same way the real “shadow fleet” operates by carrying crude and products from Iran and Venezuela. After all, if the mere fact of touching Russian molecules was to make the infrastructure carrying it a “shadow”, then a sizeable portion of storage terminals and even motor vehicles in Europe would be affected, leaving the Continent a shadow of its former self. The issue of the ‘shadow’ fleet is a crucial one, but it is important to determine fact from fiction and to not over-dramatise an issue that is currently posing one of the biggest problems for the tanker markets.

Elsewhere, in what could become a breakthrough for the CO2 shipping industry, Denmark has awarded its first licences to capture and store carbon in the North Sea to Wintershall Dea, INEOS Energy and Total, the country's climate and energy ministry said on Monday. Denmark has set a target of reaching net zero carbon emissions in 2045 and sees carbon capture and storage technology as key to reaching that target.

The Greensand project, led by INEOS and Wintershall, is expected to start injecting up to 1.5 Mn T of CO2 into depleted oil and gas fields in the North Sea by 2025, the ministry said. The project plans to increase capacity to 8 Mn T per year by 2030. Meanwhile, Total’s Bifrost project aims to inject up to 3 Mn T into a depleted oil and gas field from 2027, reaching 5 Mn T by 2030.

Meanwhile, there are significant hurdles to be overcome, especially on the logistics side, as the current CO2 carrier fleet stands at four vessels, with a total carrying capacity of 6,640 Cbm, about 11.9 T. Also, the orderbook remains underwhelming when compared to the scale of the project, with two ships on order with a combined capacity of 15,000 Cbm, about 30 T. CO2 carriers are currently used mostly by the food & drink industry, as carbon capture and storage projects remain in their infancy. Enormous progress remains to be made in order to harness the full potential of CCS as countries move towards a circular economy and greener futures.


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  • Carbon

    Carbon

    Using tailored analytics platforms, we offer client-specific advisory and trading services across the global carbon markets. Contributing to hedging strategies, sustainability reporting and financing requirements, our aim is to assist clients in managing their financial exposure to the approaching energy transition.

    Contact: Hugo Wilson
    [email protected]
    +44(0)20 3142 0121

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    Our specialised Container team in South America arranges freight & logistic solutions primarily for the mining and perishable industries.

    Contact: Andrea Meza Allemant
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    +51 99 115 2393

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    Our dry bulk chartering teams in Sydney, Melbourne, Perth, Santiago, Lima, Montevideo, Buenos Aires, Singapore and London are cargo-focussed and they fix voyage, COA and time charter business on behalf of their clients with a wide range of ship owners.
    For Atlantic business please contact Hans Bredrup
    For Pacific business please contact Rahul Khanna

    Contact: Hans Bredrup
    [email protected]
    Contact: Rahul Khanna
    [email protected]

    LNG

    LNG

    Our young and dynamic LNG team possess wide-ranging experience of spot and term charters working with all major LNG shipowners and charterers. The LNG team has close interaction with the Newbuilding and Sale & Purchase divisions with an unrivalled track record of contracting LNG newbuildings and in the sale and purchase of LNG assets.
    We maintain up-to-date knowledge and an understanding of new technologies within the LNG sector to ensure that our clients can make the most suitable and cost-effective decisions on shipping solutions.

    Contact: Joni Mackay
    [email protected]
    +44(0)20 3142 0133

    Newbuilding

    Newbuilding

    Our Newbuilding team has concluded over 500 newbuildings of all types, including LNGCs, FSRUs, drillships, crude tankers, product tankers and dry cargo vessels. We have contracted in all major newbuilding centres globally, with particular focus on the Korean Shipyards.

    Contact: Nick Wood
    [email protected]
    +44(0)20 3142 0111

    Offshore

    Offshore

    Affinity Offshore is based out of our Oslo and Houston offices. The Team focuses on world-wide sale & purchase of offshore support vessels, as well as chartering – particularly in the Americas and Mediterranean/MENA regions.

    Contact: Tor-Øyvind Bjørkli
    [email protected]

    Research

    Research

    Our research department combines real time market information with econometric modelling and the latest technology. 

    Contact: Sevita Kondyliou
    [email protected]
    +44(0)20 3142 0182

    S & P

    S & P

    Our Sale & Purchase team has extensive experience of working with private clients, national shipping companies, major corporates, oil companies, grain houses and institutional investors. We provide a cradle to grave services across all shipping sectors. We operate from London, Singapore and Seoul to give 24-hour coverage of the markets, working for both newbuilding and second-hand buyers.

    Contact: Tom Morrison
    [email protected]
    +44(0) 20 3142 0128

    Tankers

    Tankers

    Our established tanker chartering teams serve the industry from London, Houston and Santiago delivering a highly proficient spot chartering service with a prime position in the fuel oil market. The team has close relationships with oil majors, national oil companies, oil traders and major ship owners and operators. 
    Our ethos for operations and post-fixture is simple: these roles are as important to us as the chartering/commercial function, and we continue to apply those same principles of professional ship broking throughout the life of each fixture.

    Contact: Tim Gurdon
    [email protected]
    +44(0)20 3142 0142

    Valuations

    Valuations

    We provide transparent, objective ship valuation service to major owners, banks and other financial institutions at short notice and a daily basis. We provide a retainer service for regular fleet valuations.

    Contact: Felix Hargreaves
    [email protected]
    +44(0)20 3142 0118

    Carbon

    Using tailored analytics platforms, we offer client-specific advisory and trading services across the global carbon markets. Contributing to hedging strategies, sustainability reporting and financing requirements, our aim is to assist clients in managing their financial exposure to the approaching energy transition.

    Contact: Hugo Wilson
    [email protected]
    +44(0)20 3142 0121

    Containers

    Our specialised Container team in South America arranges freight & logistic solutions primarily for the mining and perishable industries.

    Contact: Andrea Meza Allemant
    [email protected]
    +51 99 115 2393

    Dry Cargo

    Our dry bulk chartering teams in Sydney, Melbourne, Perth, Santiago, Lima, Montevideo, Buenos Aires, Singapore and London are cargo-focussed and they fix voyage, COA and time charter business on behalf of their clients with a wide range of ship owners.
    For Atlantic business please contact Hans Bredrup
    For Pacific business please contact Rahul Khanna

    Contact: Hans Bredrup
    [email protected]
    +56 99 887 3036
    Contact: Rahul Khanna
    [email protected]
    +61 418 448 677

    LNG

    Our young and dynamic LNG team possess wide-ranging experience of spot and term charters working with all major LNG shipowners and charterers. The LNG team has close interaction with the Newbuilding and Sale & Purchase divisions with an unrivalled track record of contracting LNG newbuildings and in the sale and purchase of LNG assets.
    We maintain up-to-date knowledge and an understanding of new technologies within the LNG sector to ensure that our clients can make the most suitable and cost-effective decisions on shipping solutions.

    Contact: Joni Mackay
    [email protected]
    +44(0)20 3142 0133

    Newbuilding

    Our Newbuilding team has concluded over 500 newbuildings of all types, including LNGCs, FSRUs, drillships, crude tankers, product tankers and dry cargo vessels. We have contracted in all major newbuilding centres globally, with particular focus on the Korean Shipyards.

    Contact: Nick Wood
    [email protected]
    +44(0)20 3142 0111

    Offshore

    Affinity Offshore is based out of our Oslo and Houston offices. The Team focuses on world-wide sale & purchase of offshore support vessels, as well as chartering – particularly in the Americas and Mediterranean/MENA regions.

    Contact: Tor-Øyvind Bjørkli
    [email protected]

    Research

    Our research department combines real time market information with econometric modelling and the latest technology. 

    Contact: Sevita Kondyliou
    [email protected]
    +44(0)20 3142 0182

    S & P

    Our Sale & Purchase team has extensive experience of working with private clients, national shipping companies, major corporates, oil companies, grain houses and institutional investors. We provide a cradle to grave services across all shipping sectors. We operate from London, Singapore and Seoul to give 24-hour coverage of the markets, working for both newbuilding and second-hand buyers.

    Contact: Tom Morrison
    [email protected]
    +44(0) 20 3142 0128

    Tankers

    Our established tanker chartering teams serve the industry from London, Houston and Santiago delivering a highly proficient spot chartering service with a prime position in the fuel oil market. The team has close relationships with oil majors, national oil companies, oil traders and major ship owners and operators. 
    Our ethos for operations and post-fixture is simple: these roles are as important to us as the chartering/commercial function, and we continue to apply those same principles of professional ship broking throughout the life of each fixture.

    Contact: Tim Gurdon
    [email protected]
    +44(0)20 3142 0142

    Valuations

    We provide transparent, objective ship valuation service to major owners, banks and other financial institutions at short notice and a daily basis. We provide a retainer service for regular fleet valuations.

    Contact: Felix Hargreaves
    [email protected]
    +44(0)20 3142 0118

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