Russia's Sovcomflot Transfers Ships to New Management Firm to Boost Trade

Russia's leading tanker group Sovcomflot has transferred dozens of ships into a new Dubai based management company aiming to boost trade through this entity amid growing pressure from financial restrictions, according to maritime industry data and shipping industry sources.

State-owned Sovcomflot (SCF) is subject to sanctions and other restrictions by the UK and the European Union, while Washington has restricted its financial activities. 

Sovcomflot - whose fleet in the region of 80 vessels including crude, oil products and liquefied natural gas tankers - has had to deal with these capital restrictions over the past year. 

It has also had to rebase its overseas operations from Cyprus to Dubai.

Since July, 45 tankers have transferred to Dubai-based Oil Tankers SCF MGMT FZCO, according to data on the Equasis public database of maritime information. 

Some of the vessels retained separate management services with Sun Ship Management, the Equasis data showed.  

Sun Ship Management was separately designated by the European Union and the UK earlier this year. 

Britain said in May that Sun Ship Management was an entity connected to Sovcomflot and "supporting Russia to circumvent or undermine the effects of Western sanctions".    

The SCF-operated tanker fleet has not called at EU or UK ports since the early spring of 2022 and all ties with clients in those jurisdictions were terminated at that time, SCF said in a statement to Reuters. 

The additional restrictions imposed on Sun Ship Management as one of SCF’s subsidiaries in February 2023 “did not add much”, it said, in the first confirmation to Reuters that Sun Ship Management was part of the group.

"Established back in 2012, SUN Ship Management (D) Ltd continues to manage a large number of SCF vessels and remains an important member of the group," SCF's statement said.

SCF did not directly comment on the new entity Oil Tankers SCF MGMT FZCO.  

“At the moment as part of internal reorganization efforts, the company is allocating its fleet to different technical supervision teams depending on the trading geography, clients portfolio, vessels’ age and commodities transported,” Sovcomflot said.

"This corresponds to SCF’s historical mode of operations with several technical managers working under respective recognized brands."

SCF said each of them contributed to the "safety and quality of fleet’s performance".

A trader involved in Russian oil said: "The transfer may help to ease issues with getting services in international ports, bunkering and other financial operations for the new entity, though it is unlikely to be a long-term solution." 

Russia is increasingly turning to unregulated tankers operated by newly established companies aiming to step in to provide transport, although Moscow still utilizes SCF's tanker fleet as well.

“SCF still aims to be a large international shipping player in the world where it is not sanctioned," another source involved in Russian oil sales said. 

Trade and shipping sources said the new management company in Dubai was part of efforts to separate SCF and other entities that had been subject to sanctions-related designations. 

"Russian tankers are unable to get spare engine parts as the Western engine makers have pulled out and they face more difficulties like this," one Western shipping industry source said.

Finland's Wartsila, a leading ship engine maker, was among companies that suspended business with Russia last year.

(Reuters - Reporting by Jonathan Saul and Reuters reporters. Editing by Jane Merriman)