Stay informed with free updates
Just log in The war in Ukraine myFT Digest — delivered straight to your inbox.
EU shipyards are repairing Russian ice-class tankers and providing them with dry dock facilities, enabling Moscow to continue moving gas through the Arctic despite Western sanctions on its energy sector.
Without the maintenance work – provided by the Damen shipyard in Brest, France and Fayard A/S in Denmark – Russia’s Yamal LNG plant would struggle to access crucial markets during the winter, when gas prices in the Northern Hemisphere are at higher.
The two yards have serviced 14 of the 15-hull fleet of Arc7 specialty tankers being transported by Yamal LNG on Russia’s northern coast, according to satellite imagery and port call tracking data from Kpler, a data and analytics company. Some ships are called several times.
“If those two shipyards were off-limits, it would call into question all logistics operations,” said Malte Humpert, an Arctic shipping specialist at High North News who has been tracking ship movements. “They could get the service elsewhere, but that meant going well out of their way.”
Eight of the tankers have entered Damen, while Fayard has served nine since Russia’s full invasion of Ukraine in February 2022. Most of the vessels are owned by energy and shipping companies, including Greece’s Dynagas and Canada’s Teekay .
Damen confirmed that it had repaired “several vessels involved in the transport of Russian LNG”, but added that it “strictly adhered to European sanctions legislation” and that it was “not involved in the cargo choices made by shipping companies that operate these vessels”.
“No further repairs of these LNG vessels are planned for the coming period,” he said.
Fayard did not respond to a request for comment.
Cutting off Russian gas is a central policy goal of the European Commission. However, its target to reduce the EU’s use of Russian fossil fuels to zero by 2027 has been overturned by a surge in Russian LNG imports, much of it supplied by Yamal.
The activities of the ships and shipyards are not sanctioned because of the carve-outs for energy transport and because they are not Russian-flagged and the specialized tankers would not be able to deliver their cargo without the technical expertise and maintenance from the European shipyards.
The only one of the fleet that has not gone to either yard is the Christophe de Margerie, which is owned by the Russian sanctioned shipping company Sovcomflot.
The EU agreed to sanction the ship itself – the first step by the bloc to impose any sanctions on Yamal’s operations – on 16 December. The US has already hit the Yamal project with a wave of sanctions.
Christophe de Margerie’s inability to access repair yards in Europe has put the vessel out of service for six months, demonstrating Arc7’s reliance on European know-how and parts, Humpert said.
From Yamal, ships can either sail to Europe or take the much longer and more dangerous North Sea route to China. The eastbound route is only navigable during the warmer months, despite Novatek – owner of Yamal LNG – experimenting with a longer delivery window.
The Arc7 LNG carriers were built in South Korea at a cost of about $333 million per vessel, according to research by the Oxford Institute for Energy Studies.
They are more than 200 m long and can carry around 170,000 cubic meters of natural gas with a specially designed “Azipod” propulsion system to navigate thick ice.
A European shipbroker said the French and Danish yards, both of which have dry docks large enough for large tankers, are “the only ones that can handle the Arc7 and at the same time located in the right place”.
While Russian crude oil and coal have been sanctioned, gas has remained outside the bloc’s sanctions regime amid concerns about security of supply.
In a first step towards phasing out imported gas imports, EU countries agreed in June to ban the transshipment of Russian LNG from March. This will stop the use of EU ports to move gas from ice-class tankers to less expensive regular ships for transport to other countries.
Yamal LNG exported 20.9 billion cubic meters to Europe in 2023, according to OIES, of which about a quarter was sent to destinations outside the bloc. Supplies from Yamal accounted for around 85 to 90 percent of the EU’s Russian LNG imports, according to think tank Bond Beter Leefmilieu.
Additional reporting by Shotaro Now in London
