In a bid to navigate Western sanctions on its liquefied natural gas (LNG) exports, Moscow is reportedly constructing a new shadow fleet to facilitate its trade. Experts have likened these measures to a game of cat and mouse, with obscure entities in Dubai, unknown insurers, and new market entries indicating Russia's efforts to counter the latest European Union (EU) sanctions on LNG transshipment.

According to a Bloomberg investigation based on Equasis data, ownership of at least eight vessels has been transferred to unfamiliar companies in Dubai, United Arab Emirates (UAE). Notably, four ice-class vessels have already received Moscow's approval to travel through Russia's Arctic waters this summer. Additionally, three of these ships have insurers listed as "unknown," a common trait of shadow fleets employed by authoritarian regimes to evade sanctions.

Although the vessels couldn't be directly traced to Russian entities, they bear striking similarities to Russia's typical shadow fleet. Given the LNG industry's smaller scale compared to the oil market, it is highly unusual for unfamiliar names to possess specialized carriers worth millions of dollars, as reported by Bloomberg.

Four of the vessels, namely Asya Energy, the Pioneer, New Energy, and Mulan, are under the ownership of Nur Global Shipping, a relatively unknown player in the industry that entered the energy sector in 2022. Two of these vessels' insurers are marked as "unknown."

In the face of these developments, the EU plans to impose sanctions on Sovcomflot, a Russian oil transportation company, as per Bloomberg reports. The ownership of recently built ice-class vessels, namely North Air, North Mountain, North Sky, and North Way, has been transferred to a Dubai-based company called White Fox Ship Management, which lacks a formal office.

Transporting LNG presents greater challenges in terms of technical expertise and advanced technology, making tracking easier due to the smaller number of LNG carriers compared to oil tankers worldwide. Nevertheless, Russia, the fourth largest LNG exporter globally, is actively seeking alternative routes for its lucrative gas exports that continue to finance its activities in Ukraine, following the EU's 14th sanction package. This package notably includes a ban on transshipment services of Russian LNG in the EU for third-country deliveries, complicating Russia's LNG trade.

Although on-sea LNG transshipment has traditionally been difficult compared to oil, reports suggest such operations have been taking place at the Kildin anchorage north of Murmansk for several years. This could explain the licenses obtained for traversing Russia's Arctic waters.

Agathe Demarais, a senior fellow at the European Council on Foreign Relations, expressed little surprise at Russia's alleged creation of an LNG shadow fleet. She remarks that Moscow's willingness to assemble shadow fleets illustrates the game of cat and mouse nature of sanctions, where Western authorities target circumvention networks, prompting their replacement with new ones.

As Russia's strategies to evade G7 price caps on oil exports have proved to be somewhat successful, Western powers will likely need to intensify their efforts to effectively enforce sanctions and ensure they have the intended impact on Russia's economy.