PD Non Russian Tanker in the High Arctic in Summer
This will probably not be good news for Russian tanker operators, most of them operate under flags of convenience.
New Russian regulations by the Ministry of Transport propose to severely restrict shipping with petroleum products in Russian Arctic waters. This gets really sticky when we stop to consider that Russia claims all of the Arctic Ocean from their Arctic shoreline to the North Pole. If adopted, companies will be prohibited from exporting Russian Arctic oil and gas with foreign-registered ships. As is common in cabotage law, the ministry is also considering banning Arctic oil shipping via vessels that are not Russian built, even if Russian registered.
The regulatory proposal is largely seen as a negative response to western sanctions against the Russian Arctic oil industry. Those sanctions are severely impacting Russian operators Rosneft and Gazprom both of which are highly dependent on western technology and consultants for Arctic field developments.
Rosneft has announced the postponement of several projects. Apparently the ministry is deadly serious about limiting oil transport to Russian tankers regardless of negative impacts on Russian related business. In partial mitigation, the ministry has extended field license terms for Rosneft. Given the present world oil glut and consequent low prices the Russian operators may not be as damaged by the delay in bringing the oil to market as it at first appears.
The new rules however are likely to create far more damage to Russian shipowners than to foreign shipping competetion. Most Russian tanker companies are using flags of convenience like Liberia and Panama including Russia’s biggest shipping company Sovcomflot. Sovcomflot's most recently planned LNG carriers are all planned to be registered foreign. Western maritime analysts believe that the Russian shipbuilding industry is not yet ready to service the construction of the number of ships needed.
Russia won't have a major tanker yard capable of VLCC or ULCC production until the new Zvezda yard near Vladivostok is complete in 2018. We don't see the issues with the proposed new regulations as a deal killer for the Russian government. They will simply grant exceptions and exemptions to keep the oil moving as soon as it is profitable to do so, and rigidly enforce the policy once they have the fleet they want. Russia is not going to kill off their tanker building or operating sectors. Russia is a crony capitalists state the government and the firms in favor will do all right.