Mysterious buyers suspected to be linked to Russia have been buying up dozens of liquefied natural gas (LNG) vessels. These acquisitions suggest that Moscow is expanding its “dark fleet” of energy tankers, a term used to describe ships that operate under the radar to bypass sanctions. According to shipping industry insiders, these unknown companies, mostly registered in the United Arab Emirates (UAE), have rapidly acquired LNG vessels over the past year, causing market prices for older ships to skyrocket, as reported by the Financial Times.
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Echoes of the Past
This buying spree is reminiscent of how Russia previously established a dark fleet of oil tankers to navigate Western sanctions. Despite LNG sales being less affected by sanctions compared to oil, Russia is preparing for tighter restrictions. Windward, a risk consultancy, reported that more than 50 LNG vessels have changed ownership to UAE-based companies since the second quarter of 2023, a significant increase from prior years.
Complex Networks and Hidden Ownership
Recent developments suggest a complicated network of maritime operations that might be connected to Russian interests. Ship tracking group Kpler’s risk and compliance team said that some Dubai-based groups have unclear ownership structures, similar to those behind Moscow’s secretive fleet of oil tankers. Kpler’s ship-tracking data also revealed that some of the newly acquired LNG ships are now traveling routes usually used for shipping gas from Russia.
Market Impact and Rising Prices
The increased demand for older LNG ships has driven up their prices significantly. SSY, a shipbroker, noted that one LNG vessel built in 2007 sold for about $50 million in 2022, but a similar vessel sold for $80 million this year. According to the Financial Times, Toby Dunipace, managing director of LNG at SSY, stated that “The market for old steam turbine LNG ships had declined with increasing environmental regulations.” “[But we have] seen a resurgence in the value of these types of vessels. Some of the explanation could be that they are going to the dark fleet.”
Industry Concerns
These developments have alarmed industry experts who are already concerned about the rising number of aging vessels trading restricted oil. According to the Financial Times, Sergey Vakulenko, a senior fellow at the Carnegie Endowment for International Peace, explained that it is a “no-brainer” that Russia wants to build up its LNG dark fleets, with pressure increasing on Russian LNG. Vakulenko added, “I think that the Russian LNG operators think that the writing is already on the wall and are preparing for it.”
Which LNG Shipping Companies Are a Buy?
Looking at the top LNG shipping companies using the TipRanks Stocks Comparison Tool, we can see the following major shipping stocks are all deemed a Buy.
