Indian Shipper Gatik Loses US P&I Insurance

Mumbai-based Gatik Ship Management — which has emerged as a significant shipper of Russian oil since Moscow's invasion of Ukraine — is no longer using its US provider of protection and indemnity (P&I) insurance.

News of the break with the American Club comes as the price of Russia's Urals crude has topped the G7 cap of $60 per barrel for the first time since it came into force on Dec. 5.

Gatik has built up a fleet of more than 40 oil tankers since it was set up after the invasion of Ukraine in February of last year, according to the Equasis shipping safety database.

At least 34 of those vessels are understood to have used protection and indemnity insurance from the American Club, which belongs to the International Group of P&I Clubs that insures most of the global tanker fleet.

However, the American Club has now confirmed that it is no longer insuring Gatik's vessels.

Gatik could not be reached for comment, and the reason it no longer uses P&I coverage from the New York-based club remains unclear. It's also unclear whether ties between other operators and the American Club have been severed.

The change comes as Washington looks to step up enforcement of the crude oil price cap in cooperation with its allies over the coming months.

Under the price cap, Russian crude cannot be shipped on Western vessels or with Western insurance unless it is priced below the cap. The cap complements bans on imports of Russian oil adopted by the EU, the US, the UK and other nations.

Urals prices breached the $60/bbl threshold this past week for the first time since November, according to a source with access to Russia's price assessments.

This was the result of benchmark Brent crude prices rising to the high $80s and the Urals discount to Brent narrowing to $25/bbl after Opec-plus producers announced a new round of production cuts.

Dangers of the 'Shadow Fleet'

Gatik's fleet consists of at least 23 Aframax tankers, five Suezmax tankers and one very large crude carrier, as well as 14 products tankers.

But like many of the ships in the so-called "shadow fleet" of vessels that now carry Russian crude, their average age is more than 15 years old — the point at which most reputable shipowners would typically retire them, says Francesco Tassello, a senior analyst at shipbroker Affinity.

Gatik's tanker Laconia, for example, which is currently taking 600,000 barrels of crude from Russia's Black Sea port of Novorossyisk to India, was built in 2003, Equasis data shows.

Its Theseus vessel, which discharged a similar-sized cargo of Russian crude last week at Ghana's port of Tema, was built in 2006.

Gatik is one of numerous shipping companies handling Russian oil that have cropped up in the Middle East and India over the past year, but its ultimate beneficial owner is unknown. It does not even have a functioning website.

The International Maritime Organization (IMO) warned last week that vessels of the shadow fleet are characterized by "substandard maintenance, unclear ownership and a severe lack of insurance."

Ship-tracking data show at least eight of Gatik's tankers taking Urals from Russia's Baltic ports to India over the past month, with others performing ship-to-ship transfers in the Mediterranean, notably off Greece and the Spanish exclave of Ceuta in North Africa, as well as in Malaysian and Korean waters.

The IMO specifically highlighted the danger of an oil spill as a result of transshipments in open water, as well as efforts to conceal the identity and location of ships — all of which may become more common if oil prices remain strong and more vessels seek to bypass the G7 price cap.

"Unfortunately, there seems to be a general acceptance in the industry that it's a matter of when, not if, a major accident occurs," said Richard Matthews, head of research at Gibson shipbrokers.

For more coverage of the Ukraine crisis, visit Ukraine Crisis: Energy Impact