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[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Sovcomflot, Russia's largest shipping company, is reportedly selling vessels such as oil tankers as international sanctions against Russia have made ship operations difficult. This is interpreted as a measure to repay loans borrowed from European financial institutions. Some also point out that this may be an attempt to evade sanctions through disguised sales of ships.

According to the Wall Street Journal (WSJ) on the 12th (local time), Sovcomflot recently sold nine vessels, including oil tankers and natural gas carriers, to shipping companies in Dubai and Singapore. Eastern Pacific Shipping, a Singaporean shipping company, reportedly paid Sovcomflot $700 million (approximately 900 billion KRW) in exchange for four natural gas carriers.

This sale is seen as a liquidity measure to temporarily repay loans due to sanctions against Russia. Sovcomflot, a Russian state-owned shipping company, was placed on the European Union (EU) sanctions list against Russia, and European financial institutions that had lent money to Sovcomflot were ordered to recall all loans and terminate financial relationships by the 15th.

As of the end of last year, Sovcomflot is estimated to have borrowed about $2.4 billion from Western financial institutions. According to Lloyd's, a British insurance association, Sovcomflot is expected to sell one-third of its vessels to repay its loans.

However, some analysts suggest that Sovcomflot's sale of oil tankers appears to be a disguised transaction. Since ships operated by Sovcomflot have been banned from passing through U.S. territorial waters after the invasion of Ukraine and insurance certificates for transported cargo have been suspended, making operations impossible, transferring ownership to overseas companies could circumvent sanctions.

Sovcomflot has denied the allegations of disguised transactions related to the ship sales. According to WSJ, Sovcomflot stated, "We have put vessels that have become difficult to operate due to various sanctions against Russian shipping companies, including aging ships, on the market."

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