Under scanner for Russia crude transport, Gatik distances itself from fleet

According to latest information available on international shipping database Equasis, Gatik is now listed as the commercial manager of just four tankers. Three weeks ago, it was listed as the commercial manager of 38 vessels. The number declined to 19 vessels two weeks ago. At one time, Gatik is understood to have been the commercial manager of a fleet of around 60 crude oil and petroleum product tankers, valued at over $1.5 billion, and having been acquired in the aftermath of Russia’s February 2022 invasion of Ukraine.

According to The Indian Express’s analysis of changes in Gatik’s fleet database, the shipper has distributed the commercial management of at least 44 of its tankers over the past few weeks among a large number of other firms, which appear to be related to Gatik. At the same time, there appears to be no change in effective ownership of the ships as registered owners continue to remain the same in almost all cases. In fact, in the majority of cases, the commercial management has been transferred to the respective registered owners.

This comes after a series of actions by international insurers, shipping registries, and maritime classification societies against Gatik over the past couple of months. These actions reportedly included withdrawal of certification for many of Gatik’s vessels by Lloyd’s Register, withdrawal of insurance cover by members of the International Group of P&I Clubs (IGP&I) for most of the Gatik fleet, and deflagging of a large number of Gatik tankers that were flagged by St Kitts & Nevis. Such actions are likely to have stemmed from concerns that the vessels might have been transporting Russian oil sold above the West’s $60 price cap.

The office at Neptune Magnet Mall in Mumbai’s Bhandup from which Gatik recently moved out. (Photo: Hitesh Vyas)

“It is quite easy and convenient for the shipper to transfer commercial management of the fleet among many companies, limiting its presence on the paperwork. It makes tracking the fleet and establishing connections between the numerous companies difficult and helps in keeping the operations as opaque as possible,” a senior shipping industry analyst said, requesting anonymity.

Apart from transferring commercial management of most of its fleet, Gatik has also found new flags for its tankers that were deflagged by the small Caribbean island of St Kitts & Nevis in April. A large number of those deflagged tankers are now under the flag of Gabon, as per shipping databases. Interestingly, a few others are now flagged by Mongolia, a landlocked country.

As per the shipping database analysis, the commercial management of the 44 vessels has been distributed among around 41 companies, which in most cases are also listed as registered owners of the respective vessels. Incidentally, the addresses of 26 of these companies, are mentioned in the Equasis database as “care of Gatik”, along with the same address – an office in Neptune Magnet Mall in Mumbai’s Bhandup, which is also the address of another shipping firm Buena Vista Shipping LLP (BVS).

International trade sources suggest that Gatik is an arm of BVS. Interestingly, the Bhandup office has been vacant for months. In the case of 12 other registered owners of vessels, who are now also designated as their commercial managers, the address in the database is of the same building complex in Majuro, the capital of Marshall Islands – a tax haven.

In the maritime industry, vessel ownership structures can be extremely opaque, which often renders it impossible to trace the actual owner of a ship and the people behind shippers such as Gatik. The company’s purported parent BVS has not been responding to queries over its relationship with Gatik and the latter’s role in global flows of Russian oil. Repeated attempts to reach Venugopal Sharma, listed as a founder on BVS’s website, and Umesh Suvarna Vasu, who is a designated partner in BVS, through calls and e-mails have also been unsuccessful.

Incidentally, Buena Vista was also the name of a Gatik tanker. However, that name disappeared from the shipper’s fleet records a few weeks ago, as the tanker was renamed as Eastern Glory. It is among the vessels whose commercial management has been transferred to the registered owner.

There are various ownership-related categories in the maritime industry, including commercial managers, registered owners, and beneficial owners. Put simply, the commercial manager is the effective manager of the fleet and responsible for the commercial decisions pertaining to the vessels. The registered owner of the vessel is the company in whose name the vessel is registered in an international shipping registry. Often, registered owners are located in offshore safe havens for tax-related purposes and to maintain secrecy. The beneficial owner is the ultimate owner of a vessel but its name is often buried deep under layers of inter-connected offshore companies.

The European Union’s import ban and the West’s $60-per-barrel price cap on Russian crude took effect in early December 2022, making the transportation of Russian oil murkier. The price cap prohibits Western shippers and insurers from getting involved in trade of Russian oil if it trades above $60 per barrel. With the price cap coming into play, activities like ship-to-ship (STS) transfers of sanctioned Russian oil and other dark activity, which refers to a ship’s activity and movement when it is not traceable on the global automatic identification system, have reportedly shot up in recent months.

As per a recent report by S&P Global Commodity Insights, there was a 225% year-on-year increase globally in the “shadowy practice of switching off the AIS” in January-March. The analysis showed that 215 tankers were engaged in 524 dark STS transfers in January-March of this year, compared with 72 tankers involved in 161 transfers a year ago “before Russia was hit by sanctions and caps on the price of the oil it sells”. The report added that the data “shows Russia to be at the centre of a growing global trend to use dark STS techniques as a way to evade international scrutiny when transporting oil”.

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 within a year. The surge in India’s import of Russian oil has led to Moscow entering the club of India’s top five trade partners.