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A complex network of nearly 50 companies has been used to export over $90 billion worth of Russian crude oil despite Western sanctions, concealing the oil’s origins and circumventing price caps. The scheme, revealed Friday, centers around a “shadow fleet” of tankers and intermediaries and involves traders with ties to Azerbaijan, according to a report by the Financial Times.
The investigation uncovered 48 ostensibly independent firms operating from different addresses, all linked by their reliance on the same private email server – “mx.phoenixtrading.ltd.” This shared infrastructure allowed the network to obscure its connections and facilitate the continued flow of Russian oil to international markets following Russia’s full-scale invasion of Ukraine.
The Financial Times identified 442 web domains utilizing this shared server and cross-referenced them with company names appearing in Russian and Indian customs documents related to crude oil shipments. One example is Foxton FZCO, a Dubai-based company that exported $5.6 billion worth of Russian oil while using the shared email server, the report states.
Russia’s oil exporters have increasingly relied on these opaque methods to bypass sanctions, utilizing a shadow fleet of tankers and complex intermediary arrangements. According to the latest available Russian customs data analyzed by the Financial Times, covering up to November 2024, more than 80% of Rosneft’s seaborne exports were handled through this apparent network.
The scale of the operation is striking, with the network having shipped more than $90 billion in Russian crude, and the Financial Times suggests the actual figure is likely even higher. The utilize of numerous front companies echoes practices from the 1990s, according to Sergey Vakulenko, a fellow at the Berlin-based Carnegie Russia Eurasia Center.
“That’s how fortunes were made and taxes dodged by soon to become oligarchs,” Vakulenko was quoted as saying. “But it’s a big surprise that one network has become so big and critical to Rosneft. I’d have expected more sock puppets.”
Azerbaijani Traders Linked to the Network
The Financial Times investigation points to the involvement of traders linked to Azerbaijan in facilitating the oil smuggling operation. Britain has also linked Azerbaijani traders with ties to Rosneft to Russia’s shadow fleet, according to reporting from Reuters. The Moscow Times reported on this connection Friday.
How the Network Was Uncovered
The discovery of the network hinged on a technical detail: the shared email server. The Financial Times identified 442 web domains relying on “mx.phoenixtrading.ltd.” and then matched those domains to companies listed in Russian and Indian customs data as shippers of Russian crude. This allowed investigators to map out the connections between seemingly independent entities.
The use of shell companies and complex financial arrangements is a common tactic employed to evade sanctions, making it difficult to trace the origin and destination of sanctioned goods. This case highlights the challenges faced by international authorities in enforcing sanctions against Russia and disrupting its revenue streams.
The Moscow Times, an independent news organization, has faced increasing pressure from the Russian government, being designated as an “undesirable” organization and labeled a “foreign agent.” Despite these challenges, the outlet continues to report on critical issues, including the circumvention of sanctions and the ongoing war in Ukraine.
What’s Next
The revelations from the Financial Times investigation are likely to prompt further scrutiny of the oil trade and increased efforts to identify and disrupt these shadow networks. International authorities will likely focus on identifying the ultimate beneficiaries of this scheme and tightening enforcement of existing sanctions. The ongoing investigation underscores the need for greater transparency in the global oil market and more robust mechanisms to prevent the evasion of sanctions.
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