A Kremlin pit stop: EU imports EUR 3 bn of oil products from Turkish ports handling Russian oil

A new report from CREA and the Center for the Study of Democracy (CSD) has revealed that since the EU/G7 petroleum products ban took effect on 5 February 2023 until the end of February 2024, the EU has imported EUR 3 billion of oil products from three Turkish ports, Ceyhan, Marmara Ereğlisi, and Mersin, which have no refining hubs and have imported 86% of their oil products from Russia in the same period.

Turkey’s imports of Russian oil have grown almost fivefold over the last decade. In 2023, Turkey became the world’s biggest buyer of Russian oil products and imported 18% of Russia’s total exports of oil products, increasing reliance on Russia for the supply of seaborne refined oil products, mainly diesel, gasoil, and jet fuel. This reliance has risen from 52% in 2022 to 72% in 2023.

Investigations carried out by CREA and CSD of specific shipments suggest that European entities may have imported Russian oil products mixed or re-exported from oil storage terminals in Turkey.

Turkey, the world’s largest buyer of Russian refined oil products, has emerged as a strategic pitstop for Russian fuel products rerouted to the EU, likely generating hundreds of millions in tax revenues for the Kremlin’s war chest.

Martin Vladimirov, Senior Energy Analyst, Center for the Study of Democracy (CSD) and co-author

Loose EU legislation, combined with a lack of stringent enforcement, means that EU/G7 countries’ imports may still contain significant volumes of oil products of Russian origin — especially for their imports coming from Turkey that has not implemented sanctions.

Key findings

  • The EU has imported 5.16 mn tonnes of oil products valued at EUR 3.1 bn from three Turkish ports with no refining hubs, Ceyhan, Marmara Ereğlisi, and Mersin, since the EU/G7 petroleum products ban took effect on 5 February 2023 until the end of February 2024. In this same period, 86% of the ports’ imports of oil products, in value terms, was from Russia.
  • Investigations of specific shipments carried out by CREA and the Center for the Study of Democracy (CSD) suggest that European entities may have imported Russian oil products mixed or re-exported from oil storage terminals in Turkey.
  • In May 2023, the Toros Ceyhan oil terminal at the port of Ceyhan received 26,923 tonnes of gasoil from Novorossiysk — the terminal’s first import of the commodity in three months. Ten days after the import the terminal shipped a similar volume of gasoil to the MOH Corinth refinery in Greece. This trade seems to have exploited a legal loophole that allows blended Russian oil products to enter the EU.
  • Since the start of the EU/G7 ban on 5 February 2023 until the end of February 2024, Turkey has imported EUR 17.6 bn of Russian oil products, a 105% increase compared to the same period the prior year. Since the introduction of the ban, 81% of Turkey’s imports of oil products have been from Russia, showing an increased reliance that could threaten their energy security.
  • Turkey’s domestic consumption of oil products grew by 8% in 2023. In contrast, the country’s seaborne imports of oil products grew by 56% suggesting that Turkey is becoming a re-export hub for oil products, not just satisfying a growth in domestic demand.
  • Russia’s exports of oil products to Turkey generated EUR 5.4 billion in tax revenues for the Kremlin war chest, prolonging and enabling Moscow’s full-scale invasion of Ukraine.

Policy recommendations: Tighter enforcement can cut Kremlin revenues 

  • Tighten existing legislation: The EU should strengthen their sanctions regulations to define precisely that EU Member States cannot import re-exported Russian refined oil products. EU legislation remains vague on the proportion of Russian-origin oil that will constitute sanctions evasion, thereby encouraging the continuing trade and transshipment of products without the threat of repercussions. Stricter rules on enforcement must be implemented to prevent higher oil export volumes and earnings for Russia that are then subsequently used to fuel the Kremlin’s war effort in Ukraine.
  • Better enforcement: Sanctioning countries must require strict ‘Rules of Origin’ documentation when importing oil products from countries that have imported oil products from Russia. To enhance transparency and compliance, the EU should amend the Commission Implementing Regulation (EU) 2015/2447, ensuring that the customs declaration includes the true origin of oil products exported to an EU port, confirming they were not produced with Russian oil.
  • Investigate and implement strict penalties on violators: EU/G7 countries must investigate shipments from Turkish ports to deduce any violations on the transshipment of Russian oil products. In case of violations, entities must be sanctioned and served with bans and penalties. Enforcement agencies should have the power to board vessels, check certification documents that show evidence of the oil’s origin and chemically test it to determine whether the commodity contains oil originating from Russia. Tankers with falsified statements of the fuels’ origin should be treated as smuggling with all the related legal consequences. This includes the arrest of ships at sea and their confiscation.
  • Lower the price cap on products: The coalition must also lower the price cap of oil products which are currently above the market price. Lowering the price cap would be deflationary and force Russia to produce and export more volumes of refined products to make up for the loss in revenue. Lowering the price cap to USD 35 per barrel for premium products and USD 25 per barrel for low-value products would cut the Kremlin’s revenues from seaborne oil products by 68% (EUR 3.3 bn per month).
  • Remove transfer pricing loopholes: Regulatory authorities such as customs and tax agencies must also ensure that Russian companies do not use transfer pricing schemes to increase profits made from oil sold in different markets, and especially ensure that the proceeds from such transfer pricing cannot reach the Russian government. Creative transfer pricing schemes allow vertically integrated Russian oil companies to sell crude oil or refined products at artificially low prices so that they can extract a profit from selling on the wholesale market at much higher prices abroad (in countries such as Turkey). The profit out of the price difference is then moved to an offshore-registered subsidiary to avoid paying taxes in Russia. 
EDITOR’S NOTE – 14 JUNE 2024

Our initial report had stated that a shipment of diesel was delivered to the Repsol Cartagena refinery in Spain. A spokesperson for the refinery reached out to CREA to clarify that: the port of Cartagena has more than one terminal to receive oil products. The shipment you [CREA’s report] refer to went to an independent terminal operated by a company called Tancar (Tanques de Cartagena S.A.U).

To seek more clarity CREA also sought to verify this with the tracking data providers at Kpler who said that:
Tancar is a small hydrocarbon storage terminal within the petrochemical complex at the Port of Escombreras in Cartagena. Currently, it is not included in our Kpler mapping. This is because we map the entire petrochemical complex under the Repsol Cartagena refinery. Additionally, Tancar and the refinery seem to share the same berth(s), and most reports only specify Cartagena as the port of discharge/destination. This makes it difficult to differentiate between what goes to Tancar and what goes elsewhere without detailed intel. In summary, we accurately captured the discharge operation, but we do not have the Tancar terminal mapped on our platform due to the practical reasons mentioned above.

In the absence of clear evidence of any kind our, amended report states that the shipment went to the port of Cartagena — which would be a significant violation in and of itself. We will update this as and when more information becomes available to us.

Vaibhav Raghunandan, EU Russia Analyst & Research Writer, Centre for Research on Energy and Clean Air (CREA) Martin Vladimirov, Director Еnergy and Climate Program, Center for the Study of Democracy (CSD); Isaac Levi, Europe-Russia Policy & Energy Analysis Team Lead, CREA; with contributions from Ruslan Stefanov, Director, Economic Program, CSD; Meri Pukarinen, Research Programs Manager, CREA

Partners: Center for the Study of Democracy (CSD)