Shell gas shipments are being escorted by Kremlin-backed icebreaker boats ...Middle East

British oil giant Shell is facing questions over its Russian gas shipments being escorted through the Arctic Circle by Kremlin-owned icebreakers which are subject to sanctions.

Despite pleas from Ukraine for the West to halt purchases of Russian fossil fuels which help fill Moscow’s coffers, there is a burgeoning trade in liquified natural gas (LNG) transported from Siberia to corporate customers in Europe and beyond.

According to one study, imports of Russian LNG to the European Union, which remain legal, rose by nearly 20 per cent last year and were worth some £6.1bn.

Shell, the Anglo-Dutch oil major headquartered in London, is one of several European energy companies – including French giant Total – which have continued to buy consignments of Russian gas under long-term contracts agreed before the invasion of Ukraine.

The companies say they are obliged to maintain the contracts and the purchases do not violate laws or sanctions.

But questions have been raised about the methods used by Russian operators to deliver millions of tonnes of gas to their European customers after an investigation by The i Paper and Unearthed, an investigative journalism project funded by Greenpeace UK, revealed the use of icebreaker escorts through the Arctic provided by Atomflot.

The state-owned Russian company is the subject of international sanctions, including an embargo from the EU which states Atomflot provides a “substantial source of revenue” to the Kremlin, which in turn is responsible for “the destabilisation of Ukraine”.

There is no suggestion that Shell or other European companies are directly paying Atomflot to escort their shipments, which are arranged separately by the Russian refinery supplying the LNG and initially-transported on Russian chartered vessels. Shell told The i Paper that it complies with “all applicable sanctions and regulations”.

But campaigners and legal experts warned that even indirect links to a system reliant on a sanctioned Russian entity risked exposing Western companies to ethical or legal questions about the trade.

Sir Bill Browder, the sanctions campaigner and financier, called on the Treasury, which is in charge of enforcing UK sanctions, to investigate the trade mechanism and take action where suitable. He said: “Putin’s murderous war in Ukraine has been sustained primarily by revenues from oil and gas exports. The more he exports, the more Ukrainian soldiers and civilians die.

“If companies are benefiting from the use of a sanctioned Russian icebreaker to move their LNG then as far as I’m concerned that is a violation of the sanctions and should be punished.”

Under its 20-year deal with Russian energy company Novatek, Shell – the world’s largest gas trader, which is not subject to UK or EU sanctions – buys some 900,000 tonnes of gas a year from Yamal LNG, a vast energy facility on the coast of north-west Siberia.

During the winter months, encroaching sea ice around the LNG terminal and the surrounding Kara Sea means tankers often require the assistance of vast nuclear-powered icebreakers operated by Atomflot, a subsidiary of state-owned Russian nuclear power giant Rosatom, to plough a path towards European waters.

Atomflot has been sanctioned by the UK, America and the EU since the first half of 2023 as part of a co-ordinated international effort aimed at curtailing activities helping Vladimir Putin to fund his war in Ukraine, including funneling the proceeds of fossil fuel sales into the Kremlin’s coffers.

The EU sanctions, imposed in February 2023, describe Atomflot as being “key” to Russia’s “Arctic hydrocarbon strategy” and said the company was a substantial contributor to the funds amassed by Moscow for the war in Ukraine. The UK embargo on Atomflot, which included an asset freeze, said Atomflot had been “involved in obtaining a benefit from or supporting the government of Russia”.

Industry information and shipping data obtained by Unearthed has shown that at least 28 chartered tankers loaded with consignments listed as having been purchased by British or European companies were escorted by Atomflot icebreakers for at least part of their journey from Yamal LNG between December 2023 and May 2024.

Five of those shipments – each weighing an estimated 70,000 tonnes – were purchased by Shell, according to the shipping data provided by Kpler, a London-based data and analytics company specialising in energy shipping.

Ship tracking data shows vessels carrying the Shell consignments meeting with one of two Atomflot icebreakers – the Arktika or the 50 Years of Victory – in the waters outside Sabetta, the port serving the Yamal LNG plant, and then following closely behind the vast nuclear-powered ships until they reach open water. In each case, the LNG tanker carrying the Shell cargo was the sole vessel following the icebreaker.

Neither Atomflot nor Novatek responded to requests to comment.

The investigation by The i Paper and Unearthed shows that the cargoes bought by Shell were shipped to France by Russian-chartered tankers and then seemingly transferred to separate vessels chartered by the oil giant for onward shipment to its own customers in India, Turkey and oil-rich Kuwait.

Tracking data showed the five Shell gas consignments from Russia were brought to Montoir-de-Bretagne, a French LNG terminal in Brittany, where they docked simultaneously with, and adjacent to, gas tanker vessels chartered by Shell.

Elengy, the company which operates the Montoir-de-Bretagne facility, offers the ability for vessels to carry out ship-to-ship transfers – also known as trans-shipment – of LNG between docking points without mixing cargoes from other destinations. Its website states: “During trans-shipment, the LNG transferred is neither mixed nor stored in tanks at the terminal.”

Customs records also underline the supply chain leading from Siberia to Shell and its customers further afield.

Documentation for a Shell LNG shipment to Gujarat State Petroleum Corporation in India in April this year describes the cargo as having been loaded at Montoir-de-Bretagne after originating in Russia. The Shell chartered vessel, the Maran Gas Hector, can be seen on ship tracking data docking at Montoir-de-Bretagne next to the Nikolay Zubov, one of the Yamal LNG tankers which had been escorted by the nuclear icebreakers.

The five shipments are likely to have been lucrative for Shell, which last week announced it had traded 15.5 million tonnes of gas in the last quarter of 2024, making LNG its largest single product. The customs record for the shipment to India gave the cargo a value of $34.6m (£27.6m).

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There is no evidence of a direct relationship between Shell, or any other European company buying Russian LNG, and Atomflot. The 28 shipments leaving Yamal LNG with the help of the icebreakers were all chartered by a Russian shipping company linked to the gas facility, which is partly owned by Novatek.

Legal experts said in order for a UK company to be in breach of sanctions law it would have to be shown that it knew or could have reasonably suspected that a sanctioned Russian company was involved in a transaction and would have received “significant financial benefit” from it.

Atomflot makes no secret of the fact that it charges for the use of its icebreaker tanker escorting services. The English language version of the website of its parent company, Rosatom, offers a fee calculator for vessels wishing to use its icebreakers. A sample calculation suggested that the fee for escorting a consignment of 70,000 tonnes, similar to that purchased by Shell, would be about £300,000.

Peter Caldwell, a barrister with expertise in sanctions enforcement, said UK law bans British companies from dealing with the “economic resources” of any sanctioned entity or “designated person”. It also prohibits making any third-party payments while knowing – or being reasonably expected to know – that those funds could reach a sanctioned company.

Caldwell said: “If the premise is correct that funds have been made available for the benefit of Atomflot, then, depending on whether the parties were aware of this, that could be a breach of financial sanctions.”

He added: “Any business arrangement that is contingent on the participation of a designated person is likely to be at very high risk of a breach of sanctions.”

Shell told The i Paper that it was confident it was fully compliant with all sanctions rules. A spokesperson said: “We comply with all applicable sanctions and regulations.”

The Office of Financial Sanctions Implementation (OFSI), the part of the Treasury responsible for the enforcement of UK sanctions, declined to respond to questions on whether it has investigated the arrangements in place for gas shipments from Yamal LNG.

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The Russian operations of Western energy companies have been under intense scrutiny since Putin ordered the invasion of Ukraine in February 2022. Several companies, including Shell and BP, announced an intention withdraw from their Russian partnerships and retail operations.

It is understood that OFSI currently has 318 ongoing investigations into potential breaches of sanctions against Russia. Since 2016, it has issued 10 financial penalties for breaches of those sanctions, amounting to £20m.

In March 2022, after heavy criticism for buying a cargo of Russian crude oil at a discounted price, Shell apologised and pledged to phase out “involvement in all Russian hydrocarbons”. As of July 2023, the company said it had ended almost all its purchases of oil and LNG, but “still [had] one remaining long-term contractual commitment in operation”, namely its ongoing deal with Novatek.

Western countries have struggled to provide coherence when it comes to choking off the Kremlin’s earnings from fossil fuels. While a UK ban on the sale of Russian LNG came into force in 2023, the trade remains legal to and within the EU. A move in December by 10 EU countries to force a ban on all Russian gas imports to the bloc foundered, with Brussels earlier this month ordering only minor restrictions which will leave the majority of LNG shipments unaffected.

Nuclear icebreakers: Russia’s fleet of Arctic behemoths used to smash 10ft-thick ice

Capable of smashing through ice up to 10-feet thick and cruising frozen seas for up to seven-and-a-half months at a time, Russia’s fleet of nuclear-powered icebreakers is a formidable tool for the Kremlin’s ambitions to challenge for power in the Arctic. 

Moscow has long been aware of the advantages of being able to maintain a maritime presence in the waters off Siberia. The world’s first nuclear icebreaker – the Lenin – was launched in 1957 and remained in operation until 1989. 

Today, the Russian state, which remains the only country to operate nuclear icebreakers, has a fleet of eight such vessels – the highest figure since the Soviet era. The 33,000-tonne Yakutia, the latest addition to the fleet, was delivered on 28 December to Atomflot, the state-owned company which operates the ships.  

Speaking as the Yakutia was formally launched, Vladimir Putin underlined the strategic importance of the vessels to Moscow as it seeks to project power into the Arctic Ocean. He said: “[Yakutia] will contribute to addressing key multifaceted challenges facing the national economy, and further solidify Russia’s status as a naval power.” 

The result is a formidable ability to enable navigation of the Northern Sea Route – the passage between the Atlantic and the Pacific which forms the quickest maritime link between Asia and Europe by linking with the North East Passage to the north of Norway. 

As well as escorting liquified natural gas (LNG) tankers from Siberian ports, the icebreakers accompany other commercial vessels as well as delivering heavy plant and military equipment to Moscow’s energy facilities and military bases. 

The nuclear reactors used to power the vessels are more effective than conventional diesel engines at providing the concentrated power required to fracture ice. 

The Artika class of icebreaker used to escort LNG tankers is capable of smashing its way through ice at a speed of three knots. The vessels consume about 200g of uranium fuel a day, meaning reactors only have to be refuelled roughly once every 14 years.  

Moscow has increasing ambitions for its icebreaker fleet. A further three vessels are due to come into service by 2030 and work is under way on the Rossiya – 69,700-tonne behemoth which will be the largest vessel of its type in the world. 

Cahal Milmo

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