The Strange Companies Moving Russian Oil – Issue #64
A mysterious and rapid expansion of Gatik Ship Management caught attention as it rapidly grew its fleet and shipped massive amounts of Russian crude to India.
The Big Picture
In May this year, the Financial Times broke an intriguing report.
Previous issues of this newsletter have brought attention to a firm called Gatik Ship Management. The firm had seemingly emerged from nowhere, boosting its fleet from just two tankers in 2021 to 58 by 2023.
Intriguingly, its fleet was mainly used to ship Russian crude to India. Based on data analysis from Kpler, an analytics company, the paper showed the Indian group had shipped at least 83mn barrels of Russian crude and oil products. “More than half of that has come from Rosneft. Total figures are believed to be even larger than those in Kpler’s data set.”
The immediate aftermath is well-known enough. As news spread about the company – and its “dark fleet” of tankers moving oil out of Russia – Gatik lost its insurance cover. What has happened thereafter is stunning. As shipping reporters like Paul Peachey have found, Gatik’s fleet has since shrunk to just four vessels. Its vessels, too, moved to a clutch of equally unknown firms – like Gaurik Ship Management, Caishan Ship Management, Zidan Ship Management, Galena Ship Management, Plutos Ship Management, Girik Ship Management and ARC Seakonnect Ship Management.
All these firms are new. They don’t show up on India’s registry of companies. And, oddly enough, as websites like Equasis show, they are all based in India again – mostly in Maharashtra (but not in Mumbai, where Gatik's registration was traced to a rundown mall in Bhandup).
The country is not alone in facilitating this movement. In Hong Kong and Dubai too, as Reuters wrote last week, “six little-known companies based in Hong Kong and Dubai now dominate Russian oil trade with the traditional leaders such as Switzerland's Vitol, Glencore, and Gunvor as well as Singapore’s Trafigura no longer in the picture.”
These firms, as Bloomberg reported in March, are Nord Axis, Tejarinaft FZCO, QR Trading DMCC, Concept Oil Services Ltd, Bellatrix Energy and Coral Energy DMCC. Between them, they handled about 1.4 million barrels a day of Russian crude oil. “That’s more oil than what the commodity giants typically handled before the war in Ukraine, and enough to meet the entire needs of countries such as the UK and Italy,” wrote Reuters.
Even these companies are the tip of the iceberg. “The number of little-known trading firms relied on by Moscow to export large volumes of crude exports to Asia has mushroomed in recent months since sanctions over the Ukraine war led major oil firms and commodity houses to withdraw from business with producers in Russia,” says the Reuters report. “
According to Reuters's tally, at least 40 middlemen, including companies with no prior record of involvement in the business, handled Russian oil trading between March and June.
These firms, it says, have shipped at least half of Russia’s overall crude and refined products exports (6-8 million barrels per day on average) this year, turning these little-known companies collectively into some of the world's largest oil traders.
News of the Week
There is more news from Russia.
The country is planning to cut its discount on oil exports. The outcome? India’s honeymoon with cheap Russian oil – though it’s unclear how much of these imports were used domestically – is ending. The country is now looking again towards the middle east for oil. BPCL’s plans are in a state of flux as well. The oilco wanted to buy 6 million tons of Russian oil from Rosneft. “If the crude discount comes down (further) then there is no good advantage or commercial advantage of taking Russian crude,” the company’s head of finance told Reuters.
On the whole, last week was relatively quiet on the energy front. New information suggests that most of India’s solar installations (79 per cent) are coming up in five states – Rajasthan, Maharashtra, Gujarat, Andhra and Karnataka. India has committed Rs 17,500 crore to a PLI scheme under the national hydrogen mission.
BYD is rethinking its India plans after central government officials flagged concerns about Chinese investments. In one of these reports, an interesting factoid emerged. Knowing its investment would be politically charged, reported Reuters, BYD had attempted to head off concerns. One of them pertained to customer surveillance. “The proposal said voice-activated commands for apps would be available in Indian languages in BYD electric cars built in India and that all data from the vehicles would be housed in India,” it wrote.
Over the last two weeks, CarbonCopy has published a three-part series on India’s search for critical minerals.
Large questions hover here. As the world cleaves into trade blocs (the US is trying to create a battery supply chain with no exposure to China), how are developing countries like India faring in this race to secure critical mineral supplies? Politicians tell reporters that India is bound to become – demography being destiny – a global hub for manufacturing – be it semiconductors, electrolysers or rechargeable batteries.
It’s not that simple. As India’s search for critical minerals (part one) shows, geopolitics is one part of the puzzle. Another is the country’s capacity – the institutional capacity of bodies like KABIL; the country’s technological prowess in extracting/using these critical minerals (part two); and our capacity to produce, say, EV components or chips locally. If we keep importing these, our dependence on other countries persists (part three).
Yet bigger questions hover here. In this globalised age, is it feasible for countries to decouple from each other? In the US, semiconductor CEOs oppose the country’s curbs on China. While writing on India’s PLI programme – which stresses atmanirbhar (self-reliance) as well – we were told this is a bad, uncompetitive idea in practice.
Some of this draws Russia’s invasion of Ukraine to mind. The West slapped sanctions on Russia – but kept buying (covertly) Russian oil. Even more recently, China has told India – in the aftermath of the BYD crackdown – that both countries should present opportunities for each other’s growth. China, however, has occupied parts of India.
Is that the future? Do countries stay economically interdependent even as they rattle sabres? But what if these value chains get weaponised – as with the Chinese curbs on exports of gallium and germanium?
As Phenomenal World had observed, much of the third world has decided to be more strategic (and non-aligned) in its choices. And yet, countries like Indonesia, however, are falling to American curbs on firms that have Chinese investments. This brings us to a new point about coercive trade blocs.
This talk about energy and geopolitics comes with a problem. It assumes that the political calculus dictating world politics presently will remain relevant in the future. And yet, over the last month, we have seen extraordinary rains first in the hills and then over Rajasthan and Gujarat. As this newsletter gets written, parts of China are flooded, and southern Europe is reporting heat waves. “The era of global boiling has arrived,” said UN secretary general António Guterres after scientists confirmed July was on track to be the world’s hottest month on record.
Also came news that AMOC, which houses oceanic circulation systems like the Gulf Stream, is shutting down. “The latest study of the currents or “conveyor belt” that carry warmer water upwards from the tropics concludes the Atlantic Meridional Overturning Circulation (AMOC) will shut down at some point between 2025 and 2095, with the 2050s most likely,” wrote the Financial Times. In the preceding weeks, we have already heard that the Jet Stream and western disturbances are also changing.
In air and sea, the systems that stabilise the planet’s weather systems are breaking down.
And, right through this breakdown, some nations dream of new energy suzerainty. Other nations, like India, too entertain those dreams while continuing to weaken their existing ecological foundations.
Last week, the Lok Sabha passed the new Forest Conservation Act. “The new bill travels in the exact opposite direction of the Godavarman Judgment,” wrote Thirdpole.
“This means private forest land and any parcels of land that are forested – but not recorded as such in government records – will lose FCA protection... Linear projects – such as railway tracks, transmission lines and highways – that are of “national importance and concerning national security”, will be exempt from forest conservation scrutiny if they fall within 100km of India’s border. Such exemptions will also apply to defence projects, paramilitary camps and public utility projects, the last of which remain undefined. Losing FCA protection means such lands will no longer be subject to pre-clearance checks, for example seeking consent from indigenous inhabitants or making provisions for destroyed ecosystems. The bill also opens up forests for activities such as eco-tourism zones and zoos.”
Each of these provisions will come with high environmental costs. Yet, despite the environment ministry offering inadequate justifications for these amendments, the government took the unchanged draft into the parliament.
The Lok Sabha also passed the Mines and Minerals (Development and Regulation Amendment) Bill, 2023, which seeks larger private sector participation in mineral exploration and production, including lithium. This bill, too, comes with consequences for India’s forests. “(It)... dispenses with cumbersome forest clearances for mine reconnaissance and prospecting operations, making it easier for private firms to participate in an exploration of the country’s mineral resources,” wrote LiveMint. In these ways, the green economy might not be a green economy.
“The legislation has also raised and fixed mineral-wise maximum area limits for mineral concessions,” it wrote. “For prime minerals such as iron ore, the maximum area for prospecting licence and mining lease has been doubled to 50 sq km and 20 sq km, respectively.”
Another bill that made it past the Lok Sabha, yet again without discussion and through the contentious voice vote, is the Biological Diversity Bill 2023 which seeks to open doors for the further commercialisation of naturally-derived compounds, materials and raw products while severely weakening profit-sharing obligations.
Whether the three bills will make it through the Rajya Sabha in the current session, which runs until 11 August, remains to be seen with the current session of the Parliament hamstrung by disruptions.
Climate Reads of the Week
Geopolitical uncertainty triggers shift in global gas corridors.
India joins rush to renewables, but its rural solar systems fall off grid.
Hin-done deals: How a river was sold. This is an outstanding report on land sales to poor families along the (now-flooded) Hindon's 103km course in the NCR districts of Ghaziabad and Noida.
From Cracks To Catastrophe: Pir Panchal's Sinking Houses. “Residents blamed the ongoing Katra-Banihal railway line and the construction on National Highway 244, which connects the Doda and Kishtwar districts in Jammu to Anantnag district in south Kashmir, as potential causes of the land subsidence. These projects involve extensive tunnelling and bridge construction in the sensitive Pir Panchal mountains. Additionally, the 850-MW Ratle hydropower project, being built about 7 km away from Thathri, is also seen as a cause of the crisis.”
‘I trusted him’: human trafficking surges in cyclone-hit east India.
Extreme continent: New WMO report paints alarming picture of climate emergency in Asia
Vietnam’s Mekong Delta is sinking, but innovations offer hope.
Will Mongolia’s crackdown on graft unlock its mineral riches?
Dying coal plants hold the key to NTPC’s, and India’s, ‘green’ transition