UK Sanctions on Sovcomflot Create New Challenge for Russia's Tankers
On Thursday, the United Kingdom added Russian state-owned shipping company Sovcomflot (SCF) to its list of entities sanctioned for the invasion of Ukraine. It adds to the growing difficulties for Russian shipping: foreign shipowners are increasingly inclined to pass on Russian cargoes, top container lines have suspend port calls and some nations have banned Russian-linked ships.
The new listing places an asset freeze on Sovcomflot, which effectively prevents UK entities from entering into financial transactions with the company. Since much of the world's marine insurance and reinsurance business is based in England, the listing will likely make it much harder for SCF to obtain cover.
"The (UK’s) decision this morning to impose an asset freeze means it is going to be very difficult for UK based insurance companies or reinsurers," an insurance industry source told Reuters. "No contract can function on the basis of an asset freeze."
The EU has already put SCF on a list of blacklisted firms, and Canada sanctioned the company on the first day of the invasion. The United States has prohibited SCF from raising funds on American capital markets. In addition, the UK and Canada have banned all Russian-owned ships.
Cumulatively, these restrictions appear to be constraining the movements of Sovcomflot's fleet. In order to avoid scrutiny and in-port difficulties, analysts say that some SCF tankers appear to be engaging in the standard obfuscation technique of ship-to-ship transfer, a tactic used daily by Iran, Venezuela and North Korea. As of March 11, at least nine other SCF vessels were adrift and awaiting orders, according to Bloomberg.