From 2 to 58 tankers in a year: Indian firm's meteoric rise shipping Russian oil

Over the past 18 months, a giant of international oil shipping has seemingly emerged from the rundown Neptune Magnet Mall in Mumbai. The corporation, which was formerly an unheard-of Indian shipping concern, has become one of the biggest shipowners in the world since Russia's invasion of Ukraine.

Only two chemical tankers were owned by Gatik Ship Management in 2021. According to maritime experts VesselsValue, by April it had bought a fleet of 58 boats with an estimated total value of $1.6 billion. 

However, the company's history and ownership are obscure, and there are few corporate records. The group did not show up in India's official corporate registry despite having registered as an exporter in India on March 31 of this year. 

One crucial hint is that Gatik shares an address in the drab shopping mall with the Mumbai-registered company Buena Vista Shipping, another little-known operation with assets worth little over $100,000 two years ago. 

The oil market is mystified as to who owns Buena Vista Shipping and who provided the capital for Gatik's quick fleet expansion. Commodity dealers, experts, and ship brokers all speculate about a possible connection to the Russian oil giant Rosneft, the company's largest customer.

Tanker tracking data shows that most of Gatik's newly-bought fleet has been used to bring oil from Russia to ports in India. The Financial Times looked at data from the analytics company Kpler and found that the Indian group has moved at least 83 million barrels of crude oil and oil products from Russia. This is enough to meet the UK's oil needs for more than two months. 
Rosneft has given more than half of that amount. It is thought that the total numbers are even bigger than those in Kpler's data set. 

"It was inevitable that Russian oil companies would want to get into shipping after the west put sanctions on them, and I think Gatik is the best example of this," said Viktor Katona, head of crude analysis at Kpler.

"Out of nowhere, a company in a country that is friendly to the Russian government appears, buys a huge number of tankers in less than a year, and almost exclusively works with Russian flows."

In reaction to Vladimir Putin's full-scale invasion of Ukraine in February 2022, the West put restrictions on Russian oil exports. These restrictions have completely changed the way oil markets work around the world. Rosneft, which is Russia's largest oil producer and is run by the Kremlin, has been at the centre of the storm. Igor Sechin, the company's CEO and a close friend of Putin's is one of the most hawkish and hard-line people in the Kremlin, which is how he got the nickname 'Darth Vader'.
 
The EU has put a number of limits on Russian crude. The most recent is a price cap on oil handled by European companies. Last year, Trafigura and Vitol, two of Rosneft's biggest customers, stopped doing business with it. After the sanctions, New Delhi decided to buy more oil from Russia instead of imposing its own penalties or following a price cap set by the G7.

In this setting, Gatik came into being. Vessels Value, which keeps track of tanker deals, says that Gatik has bought at least 56 ships since March 2022. Thirteen of these ships were bought in December when the EU put a ban on buying Russian oil. 

Rebecca Galanopoulos of  'Vessels Value' says that Gatik is now one of the biggest tanker owners in the world because of these purchases. "To put this in perspective, almost 14,000 live tankers are owned by 1,361 different companies. Only 20 companies, including Gatik, own 50 or more live tankers."

The vessels have vanished into the shadows as well. As recently as late March, at least 35 of Gatik's ships were covered by Western insurance, with adherence to the G7 price ceiling on Russian oil supplies established in December. But by the beginning of April, none of Gatik's ships was insured by any of the well-known big mutual providers. 

Shipping records indicate that the ageing vessels in Gatik's expanding fleet previously transported crude oil around the globe. Once acquired by the Indian group, they began to prioritize the Russia-India route.

Gatik, whose name comes from the Sanskrit word for "speed," has helped make one of the most important changes in oil flows in decades. Before the war in Ukraine, less than 1% of India's oil came from Russia. Official trade figures say that it now makes up about 30% of trade. 

Russia invaded Ukraine, but New Delhi hasn't said anything bad about it in public. As a result, Russia has sold millions of barrels of oil to India at a cheaper price than to other buyers. 

India paid $48.03 per barrel for oil before it was shipped in the first quarter of 2023. This was $10 less than the average price other countries paid, according to a study from the Kyiv School of Economics based on records of Russian oil sales.

Through these kinds of deals, India has bought most of the Urals crude that Russia used to send to the EU market. Three people who know about the situation say that some Indian plants have said that the heavy Russian blend has clogged up old refinery equipment.

In reaction, Sechin the Rosnfet CEO, signed an agreement with the Indian Oil Corporation, the country's biggest refiner, in March to send more oil to India and "diversify its blends." Kpler's Katona said that Rosneft was the only Russian oil company that had a footprint in India before the war. This was because it had a stake in the Nayara refinery in Gujarat. He said, "They already had a foot in the country, and they know how business is done." 

The exact link between Gatik and Rosneft is not clear. A staff member at Buena Vista said that Gatik was "part of" the group, but the company did not answer the FT's questions. But it's clear that they're close. 

The FT reported that Indian officials who bought oil for their plants did so directly with Rosneft, not through middlemen. The cargoes are also sold on a "cost, insurance, and freight" basis, which means that Rosneft is responsible for getting the crude to the port in India. Before the war, Rosneft chose a "Free On Board" basis, in which the buyer was in charge of shipping.

Sechin, a wine connoisseur who enjoys hunting and jazz, is well-feared in Moscow due to his ties to the security agencies. Sechin, a former army translator who speaks fluent Spanish and Portuguese, has transformed Rosneft into a powerful tool for Russia's foreign affairs. However, the company's role as Russia's major oil exporter has been jeopardised as a result of the sanctions.

Rosneft entered the battle without a sizable fleet of its own, relying on purchasers to move their oil. It made a brief attempt to build tankers with the Russian manufacturer Zvezda in 2014, but the project stalled, in part because Rosneft never imagined the west would risk disrupting global oil flows by barring Russia's access to transportation, according to a person close to Rosneft. 

However, because of the sanctions and restrictions, Rosneft and other Russian producers needed to find new customers as well as ships to deliver the oil. As the cost of delivering Russian oil increased, a global "ghost fleet" of unidentified vessels eager to risk sanctions sprang up to serve this lucrative new market.

When you go to the Indian companies' offices in Mumbai, you don't learn much more about Gatik and Buena Vista. At the postal address that was given for both companies before, all the letters addressed to the mystery company were piled up on the floor. The Neptune Magnet Mall is where many shipping companies are based. 

Gatik Ship Management signed up as a commercial exporter with India's Directorate General of Foreign Trade on March 31 using the mall address of the old office. 

Buena Vista has recently moved to a new, shiny building in a wealthy suburb of the city that is next to a lake. A worker said that Gatik was "part of" the group, but he or she wouldn't answer any more questions. The person said that the management wants to keep a "low profile." 

Umesh Suvarna Vasu and John Pinto Agnelo, both of whom are Indian, are the company's listed directors. The company also has an office in Dubai. The company has been looking for head cooks and oilers, among other positions, according to nautical job boards. People at the mall where Buena Vista's old office was said that the company was hiring a lot of people right before it moved.

Only two of Gatik's ships are registered to single-vessel companies in the Marshall Islands, and it is not known who owns these companies. 

But in a 2016 piece in Russian Pioneer magazine about his love of jazz, Sechin waxed poetic about one of his favourite bands, the "magnificent" Cuban son orchestra, the Buena Vista Social Club.

One of the ships in Gatik's fleet is called the Buena Vista, either by accident or on purpose. In the Marshall Islands, it is owned by a company called Social Club Inc.

Photograph: Representative Image used