The long game: how tanker companies invent new loopholes for the transportation of Russian oil

In 2023, a new and mysterious company “Kurow Shipping” appeared on the tanker market. The company attracted attention by immediately ordering eight new tankers at one of the Chinese shipyards. In addition, Kurow Shipping may be associated with the transportation of Russian oil.
Why this case is something new for companies of the so-called shadow fleet – read in the USM article.

What is Kurow Shipping?

It is worth noting that the journalists of the European edition of TradeWins  the first to draw attention to the mysterious company. Investigator Irene Ang said in her report that Kurow is registered in the Marshall Islands, but the company’s office is located in Dubai. However, the Chinese media say that the company has “Turkish roots”.

Ang emphasized that Kurow Shipping had just started — and immediately built a fleet of ten vessels.

You can read the full text of the TradeWins investigation at the link . 

The fact that Kurow Shipping ordered new tankers from the Chinese shipyard Zhoushan Changhong attracted the attention of journalists. initially, in the summer, it became known about four LR2 tankers of the aframax type with a deadweight of 115 thousand tons. And already in December 2023, the company ordered four more vessels.

All eight tankers are to be built by 2027, with first deliveries expected in 2025. You can read the list of orders by following the link or in the image below:

Kurow Shipping and K&O Ship Management

It should be noted  that Kurow Shipping is associated with another company – K&O Ship Management. In addition to the fact that the registered address of both firms is the same (both companies are “located” on the same floor in the Dubai World Trade Center), there is unconfirmed information from the media that K&O Ship Management may be a subsidiary of Kurow.

K&O Ship Management is a fairly “famous” company: due to the transportation of Russian oil, the company was sanctioned in Ukraine ( National Agency on Corruption Prevention ) and in Great Britain.

In fact, K&O Ship Management has a direct connection with the Russian Sovkomflot. The firm reportedly operates 10 vessels, most of which are owned by Hong Kong companies. In total, K&O’s fleet consists of eight tankers and two bulk carriers, all vessels flying the flag of the Panamanian registry.

In 2023, K&O vessels also changed class to join the Indian Register of Shipping. It is a strange coincidence, but the largest share of the “shadow fleet” market belongs to this classification society.

In the summer of 2023, Splash  found some representatives of K&O Ship Management on LinkedIn. So, the company’s fleet manager is Captain Yevhenii Chubenko, whose profile, in particular, states that he is the fleet manager at Sovkomflot.

Journalists also found another K&O employee — in various photos on social networks, he is dressed in the uniform of Sovcomflot. Unfortunately, the USM editors could not find the same accounts and confirm the information – most likely, the profiles were deleted after media coverage.

The connection between Kurow Shipping, K&O Ship Management and Covart

In December, the US Office of Foreign Assets Control (OFAC) mentioned Kurow Shipping and K&O Ship Management.

As Byron McKinney, one of the specialists of the analytical corporation S&P Global, said , in the latest OFAC marine assignment dated December 20, there are at least three companies that were mentioned as carriers of Russian oil. In particular, the “famous” “Covart”. Let’s talk a little about her.

Covart Energy Limited (or simply Covart) specializes in the supply of petroleum products by sea and rail. The company is registered in Hong Kong and included in the sanctions list of the US Treasury.

It is noted that the company has sharply increased its share in the trade of Russian oil after the implementation of the price cap policy. Thus, since May 2023, vessels chartered by Covart have made at least 23 calls to Russian ports.

Covart also owns the Russian-flagged Sanar 15, a tanker that normally operates in the Sea of Azov, offloading oil to larger vessels.

At the time of the report, OFAC notes that Covart was chartering the Sovcomflot vessel from Primorsk, Russia.

“The ownership structure of vessels chartered by Covart varies from newly sanctioned entities such as K&O Ship Management and Kurow Shipping, as well as a small number of Greek firms,” the US Office of Foreign Assets Control said in a report.

Why does the activity of Kurow Shipping affect the US Navy

Of course, all this confusion with dozens of companies was done on purpose — this is not a new attempt by Russia to remove the traces of illegal transportation of its oil. However, the case of Kurow Shipping is really something new and carries two big threats.

The first of them: Kurow Shipping did not purchase old tankers, as “shadow” carriers of Russian oil usually do, but ordered new ones.

If we imagine that Kurow Shipping is really connected with the transportation of Russian oil, then this reveals somewhat the intentions of the Russian government — in particular, that Russia is preparing for a “long game.”

Usually, the old fleet used to transport Rosneft is used to sacrifice – the “shadow” carriers do not care about both sanctions and environmental regulations. It is worth mentioning the explosion on the ship Pablo, which was carrying oil subject to sanctions, in May 2023 off the coast of Malaysia. After that, the Malaysian authorities found themselves in a difficult position, because they could not contact the owner of the ship, and therefore make a decision about what to do with the ship – the tanker was simply abandoned.

There is also information that each of the LR2 oil tankers cost Kurow Shipping approximately $61 million, and the total cost of the eight vessels was approximately $488 million. This is not to say that the current cost of a new similar tanker is approximately $72.5 million (according to the Clarkson firm). .

Of course, old tankers have increased in price due to demand from “shadow” carriers, but not so much – ordering a new tanker is still more expensive. In addition, the Kurow Shipping order is a concern because the contract involves the construction of a new vessel at a shipyard that is subsidized and controlled by the Chinese government.

In fact, Kurow Shipping is trying to establish a legitimate presence in the market. It seems that Russia has found a new way to continue transporting its oil.

The second big threat is already geopolitical. China and Russia are not the only countries facing an urgent need for long-distance tankers: the United States also needs them.

In the event of a major conflict in the Pacific, the United States would need about a hundred tankers of various sizes to supply its Navy with fuel. According to forecasts, up to a hundred tankers of various types are needed to cover the needs of the naval forces and aviation. But a year ago, analysts noted , noted that the US had access to fewer than ten such vessels.

Similar opinions opinions are voiced in Maersk Line Limited. Analysts note that in the conditions of a wide-ranging conflict with China, the US will lose access to oil sources in the region that it currently relies on. And building new tankers is also a problem for the US: China’s shipyards, although busy, still outnumber the capabilities of the Americans.

Therefore, when Russia, a de facto ally of China, builds new large tankers at Chinese shipyards, it endangers confidence in US forces.

Currently, there are no direct connections between Kurow Shipping and the Russian government. But if you imagine that Kurow Shipping is really connected to Russian oil, you can see how important it is to stop the activities of “shadow” companies. There is only one conclusion – in times of global tension, the maritime industry continues to play an important role in the national security and economic prosperity of many countries.

Фото: JML Shipyard Agency