Stay informed with free updates
Simply sign up War in Ukraine myFT Digest – delivered straight to your inbox.
EU shipyards repair Russian ice-type oil tankers and provide them with dry dock facilities, enabling Moscow to continue transporting gas through the Arctic despite Western sanctions on its energy sector.
Without maintenance – provided by the Damen shipyard in Brest, France, and Fayard A/S in Denmark – the Yamal LNG plant in Russia will struggle to access vital markets during the winter when gas prices in the Northern Hemisphere are at Its highest levels.
The two yards served 14 of the 15-strong fleet of specialized Arc7 tankers shipping from Yamal LNG on Russia's far northern coast, according to satellite images and port call tracking data from Kpler, a data and analytics company. Some ships called several times.
“If these two shipyards were blocked, it would put the entire logistics operations in doubt,” said Malte Humbert, an Arctic shipping specialist at High North News who has tracked ship movements. “They can get service elsewhere but that means moving on.”
Eight tankers have arrived at Damen, while Fayard has provided service to nine of them since Russia's large-scale 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 transportation of Russian LNG,” but added that this “strictly complies with European sanctions legislation” and that it “was not involved in the shipping choices made by the shipping companies operating these vessels.”
She added: “There are no plans to carry out further repairs to LNG ships during the coming period.”
Fayard did not respond to a request for comment.
Phasing out Russian gas is a central policy goal of the European Commission. However, its goal of reducing the EU's use of Russian fossil fuels to zero by 2027 has been derailed by increasing imports of Russian liquefied natural gas, most of which is supplied from Yamal.
The activities of ships and yards are not subject to sanctions because they are allocated to transport energy and because they do not fly the Russian flag, and specialized tankers will not be able to distribute their cargo without technical expertise and maintenance from European yards.
The only ship from the fleet that has not stopped at either yard is Christophe de Margerie, owned by the sanctioned Russian shipping company Sovcomflot.
The European Union agreed to impose sanctions on the ship itself – the first step by the bloc to impose any sanctions on Yamal's operations – on December 16. The United States has already hit the Yamal project with waves of sanctions.
Christophe de Margerie's inability to reach repair yards in Europe resulted in the ship being out of service for six months, demonstrating Arc7's reliance on European know-how and spare parts, Humbert said.
From Yamal, ships can either sail towards Europe or take the longer and more dangerous Northern Sea Route to China. The eastbound route can only be sailed during the warmer months, although Novatek – owner of Yamal LNG – is experimenting with a longer shipping 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.
It is more than 200 meters long and can carry about 170,000 cubic meters of natural gas with an “Azipod” propulsion system specially designed for navigating thick ice.
French and Danish shipyards, both of which have dry docks large enough to accommodate mega-tankers, are “the only ones capable of handling Arc7 vessels and at the same time being located in the right location,” one European shipbroker said.
While sanctions have been imposed on Russian crude oil and coal, gas has remained outside the bloc's sanctions regime amid concerns about security of supply.
In a first step towards phasing out shipped gas imports, European Union countries agreed in June to ban the transshipment of Russian LNG from March. This will stop EU ports being used to transfer gas from oil tankers to less expensive regular ships for shipment to other countries.
Yamal LNG exported 20.9 billion cubic meters to Europe in 2023, according to the International Cooperation Organization, about a quarter of which was sent to destinations outside the bloc. Supplies from Yamal account for about 85 to 90 percent of the European Union's imports of Russian liquefied natural gas, according to the research center Bond Peter Levmilio.
Additional reports By Shotaro Tani in London
