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Journalism of Courage
AN INDIAN SHIPPING company with an ageing fleet of oil tankers has suddenly emerged as a centerpiece in Russia’s oil trade with India and other countries. In just over a year since Russia’s February 2022 invasion of Ukraine, Gatik Ship Management has amassed a fleet of old oil tankers.
According to the latest available data shared with The Indian Express by London-based maritime market intelligence firm VesselsValue, Gatik has put together a fleet of as many as 61 old oil tankers since March 2022. A vast majority of the vessels are older than 15 years, with the average age around 17 years, and the fleet’s cumulative value is estimated at over $1.5 billion, the firm said.
Gatik’s emergence as one of the biggest buyers of old oil tankers comes in the wake of Russia’s invasion of Ukraine, which led to the West taking punitive actions against Moscow, including the European Union’s import ban and the West’s $60-per-barrel price cap on Russian crude effective December 2022. The price cap prohibits Western shippers and insurers from getting involved in trade of Russian oil if it trades above $60 per barrel. India and China emerged as major destinations for Russian oil following a sharp reduction in Russian oil supply to the West and shift in trade flow patterns.
“This led to the emergence of new market players, who were keen to take advantage of the premiums available from carrying sanctioned cargoes, which traditional owners are no longer willing to carry. At the same time, these new entrants to the tanker market have created a link that has enabled Russian oil to carry on flowing, with very little impact from the sanctions,” said Rebecca Galanopoulos Jones, an analyst at VesselsValue.
From being a marginal supplier of crude oil to India before the war in Ukraine, Russia is now New Delhi’s largest source of crude, having displaced traditional heavyweights like Iraq and Saudi Arabia. The surge in India’s import of Russian oil has catapulted Moscow into the club of India’s top five trade partners.
Global trade sources suggest that Gatik is an arm of Mumbai-based Buena Vista Shipping LLP (BVS) and has links to a Dubai-based shipping entity as well. Interestingly, one of Gatik’s tankers is also learnt to be named Buena Vista. Gatik, however, does not have any record on the Registrar of Companies (RoC) database. While it does have a company website, the site is under construction with the webpage flashing the message “launching soon”.
Gatik, however, does have a Legal Entity Identifier (LEI) code, which is a unique global identification code for legal entities participating in financial transactions. As per records in various global LEI databases, including Bloomberg LEI, Gatik’s address is the same as the one mentioned on the BVS corporate website – an office in Neptune Magnet Mall in Mumbai’s Bhandup.
When The Indian Express visited the address, the office was locked. Employees in the neighbouring office said that the BVS staff had moved to a new office in another part of the city. On being asked about Gatik, they referred to it as the “sister company” of BVS.
As per the LEI databases, Gatik is a partnership firm, which might explain why it has no trace on the RoC database. Registration is not mandatory for partnership firms in India. China Shipbuilding, a Chinese broker company that provides ship building and repair services, has listed various Gatik Vessels in its database along with the same Mumbai address for the shipper.
Multiple calls and e-mails to BVS over a three-week period did not elicit a response. Those who took the phone calls at Buena Vista’s office declined to comment and asked for the queries via e-mail. E-mails pertaining to Gatik sent to China Shipbuilding and India’s Directorate General of Shipping also remained unanswered.
According to information sourced by The Indian Express, BVS was formed in 2015 as a limited liability partnership (LLP) firm with two designated partners—Venugopal Sharma and Umesh Suvarna Vasu. Attempts to reach Sharma, listed as a founder on BVS’s website, and Vasu, who is a designated partner in BVS, through calls and e-mails were unsuccessful. While Sharma, a former sailor, is not listed as a designated partner in BVS anymore, the company website says he is “at the helm of the board of directors”. Sharma’s LinkedIn profile says he is BVS’s managing director. In 2019, one John Pinto Agnelo became the second designated partner in BVS with Vasu.
According to energy cargo tracker Vortexa, Gatik’s tankers have operated the most since December 2022 on routes between Russia and India, followed by Russia-Turkey, Russia-China, and Russia-Saudi Arabia. This suggests that Gatik’s operations are likely to have gone beyond the scope of Russia-India oil trade. In fact, Indian shippers have emerged as the third-largest operators of vessels involved in Russian oil trade, after Greek and Russian operators, as per Vortexa. At the same time, several major ship-owners like Trafigura and Total, which were previously quite active in the Russian crude trade, exited.
It is, however, not clear whether Gatik actually owns any or all of the ships in its fleet, or is essentially managing and operating the fleet. This is because the maritime industry has extremely complex ownership structures that often render it impossible to trace the actual owner of a ship. A large number of its tankers are named after Greek mythical characters Artemis, Prometheus, Heracles, Achilles, and Theseus, among others. Vessel names of Indian origin, including Sai Baba and Nanda Devi, also feature in Gatik’s fleet, as per the China Shipbuilding database.
As per global shipping journal Lloyd’s List, as on April 5, the small Caribbean island of St Kitts and Nevis flagged at least 38 tankers belonging to Gatik. “St Kitts & Nevis, along with Cameroon, Gabon, Palau, Djibouti and the Cook Islands, are the dominant, smaller (ship) registries covering the dark fleet. Tanzania, Sierra Leone, Guyana, Togo, Sao Tome & Principe and Comoros are other privately managed registries connected with dark fleet activity,” Lloyd’s List said in a note. Dark fleet, or shadow fleet, are terms used to refer to tankers involved in trade of sanctioned oil by circumventing the West’s sanctions.
THE West’s punitive actions against Russia, including a price cap on its crude since December, have helped companies like Gatik take risks and exploit opportunities. The price cap prohibits Western shippers and insurers from getting involved in trade of Russian oil if it trades above $60 per barrel. So, India and China emerged as major destinations for Russian oil, providing conditions for such firms.
On April 21, however, Lloyd’s List reported that St Kitts & Nevis de-flagged most of those 38 Gatik tankers. This followed reports that members of the International Group of P&I Clubs (IGP&I) recently withdrew insurance cover for most of Gatik’s tanker fleet over concerns the vessels might have been transporting Russian oil sold at prices above the West’s $60 price cap. P&I insurance refers to protection and indemnity insurance. A week later, Lloyd’s List said that many of the deflagged Gatik vessels were now being flagged with Gabon.
“The American Club was the largest single provider of insurance services to Gatik in the group. According to shipping databases, only two tankers remain under its cover… Although it is unclear why the cover is no longer being extended…each protection and indemnity policy includes a sanctions exemption clause that can be enacted if there is a concern a ship is involved in a non-compliant trade,” international shipping journal TradeWinds noted in an April 18 report.
The 12 P&I clubs which comprise the IGP&I together provide liability cover for around 90 per cent of the world’s ocean-going tonnage. The group includes major Western and Japanese shipping insurers. While India and numerous other countries have not accepted the West’s price cap on Russian oil, absence of Western insurance could significantly hinder flow of Russian oil.
“An immediate impact could be a shrinking of available tanker fleet…A reduced dirty tanker (crude oil tanker) fleet size would put a squeeze on Russian crude exports and push up freight costs, dampening the economics of importing Russian crude for China and India,” said Serena Huang, head of APAC analysis at Vortexa.
The impact of these recent developments on Gatik’s operations as well as Russia’s oil trade with India and other partners remains to be seen. Gatik successfully capitalised on an opportunity created by the war in Ukraine. It has clearly been able to navigate the complicated and murky waters of opaque Russian oil flows with relative obscurity and surprising efficiency.
(With inputs from Hitesh Vyas in Mumbai and Jay Mazoomdar in New Delhi)
