Banned Russian oil is coming to Canada. Here's how
'Shadow fleet' exploits loophole to trade Russian oil, possibly fuelling Canadian vehicles
Millions of dollars worth of Russian oil is coming into Canada thanks to a loophole in federal sanctions, providing much-needed income for the Kremlin to fuel its ongoing invasion of Ukraine.
CBC News's visual investigations team, in collaboration with the Centre for Research on Energy and Clean Air (CREA), found that since the start of the Ukraine war roughly 2.5 million barrels — or $250 million worth of refined petroleum products like gasoline, diesel and jet fuel — have ended up in Canada.
Based on calculations made by CREA, those Canadian oil imports have provided the Kremlin with just over $100 million in revenue, enough to recruit thousands of soldiers in Russia.
"When consumers in Canada are buying vehicle fuels or getting on flights, there is a high probability that a proportion of those jet fuels or diesels ... could be made from Russian crude," said Isaac Levi, Europe-Russia Policy and Energy Analysis team lead at the Centre for Research on Energy and Clean Air.
The crude oil originates in Russia, but because it is refined in another country like India or Turkey and mixed with crude from other sources before being exported to Canada, it does not violate sanctions.
"We're calling for the refining loophole to be closed and this process to be banned," said Levi.
Sanctions compliance, according to William Pellerin, international trade lawyer at McMillan LLP, is "more difficult because of a lack of clarity in the Canadian sanctions regime."
"It's very clear that Russian crude is prohibited from being imported into Canada. It's also very clear that non-crude Russian oil products are prohibited from entering into Canada," said Pellerin.
"What is not clear is … the use of Russian crude imports that then get processed and finished by a third country."
Some of the crude oil — according to data on port visits by vessels, satellite imagery and ship traffic data provided by Marine Traffic — is shipped to those refineries by Russia's "shadow fleet" — a group of tankers widely said to evade sanctions and international oil price cap rules, which limit the price at which Russia can sell its oil.
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"[The loophole] undermines the overall intent, not just of sanctions, but of the whole effort to support Ukraine and punish and try to change Russia's behaviour," said Jane Boulden, a political science professor at Queen's University in Kingston, Ont.
Last week, the U.S. Treasury Department announced a raft of new sanctions against two major Russian oil producers and 183 vessels — many in the shadow fleet — to crack down on what it called "third-country entities" facilitating the Russian oil trade.
"The United States is taking sweeping action against Russia's key source of revenue for funding its brutal and illegal war against Ukraine," said Secretary of the Treasury Janet Yellen in a statement.
India's role
Shortly after Russia invaded Ukraine in February 2022, Canada, the U.K. and the U.S. banned Russian crude and petroleum oil products in an effort to hobble Russia's economy. Later that year, the G7 enacted price cap rules to limit the price of Russia oil to $60 US per barrel.
But some countries, such as India, which is not a member, don't adhere to the G7's rules.
India is home to the world's biggest refinery, Jamnagar, which can export over a million barrels of oil a day.
Trade data shows that, following the start of the war, Jamnagar went from importing three per cent of its crude from Russia to over 50 per cent over parts of 2024. Canada's imports from Jamnagar increased by 35 per cent in the same period.
Refined fuels experts told CBC News that it's difficult to confirm the exact amount of Russian crude in the products coming from Jamnagar, but it's fair to say some is entering Canada.
"You're generally going to separate crude on quality — not country," said Robert Auers, a refined fuels market analyst at RBN Energy. "There's no reason that [Jamnagar] would try to keep these crudes segregated, unless for some financial or other incentives."
Jamnagar did not respond to CBC News's request for comment.
Satellite tracking
In early September, the Legacy — a 250-metre crude oil tanker — set off from Ust-Luga Crude Oil Terminal in Russia, near Saint Petersburg, carrying 60,000 barrels of crude.
According to trade data, Rosneft Oil Company, a Russian company under U.S. sanctions, sold that oil to India-based Reliance Industries Limited, the owner of Jamnagar refinery.
And in early October, satellite images show the ship in the waters near the port of Sikka, in western India, as it prepares, according to trade data, offload that oil for Jamnagar refinery.
The Legacy is one of the hundreds of vessels that help Russia trade oil and evade sanctions, according to the U.S. Treasury Department.
Shadow fleet tankers often launder Russian oil using tactics including ship-to-ship transfers, changing nationality flags to obscure their identities, turning off tracking systems — and they are often uninsured, according to a report by the Atlantic Council. Some ships have been involved in international snafus, such as the Eagle S, accused by Finnish police last month of having deliberately damaging underwater telecommunication cables in the Baltic Sea. Finnish authorities claim the Eagle S is part of Russia's shadow fleet.
"If you're then refining that [Russian shadow fleet] oil … it certainly will be co-mingled in that refining process and then exported," said David Tannebaum, director at Blackstone Compliance Services, which provides sanctions compliance advice.
After refining in India, fuels can then be exported to Canada. For example, after leaving Jamnagar late last year, an Indian tanker, the Lilac Victoria, delivered over 50,000 barrels of refined fuel to the Everpoint Wind Tupper refinery in Nova Scotia in December.
Some of those 50,000 barrels likely contain oil produced from Russian crude, multiple experts told CBC News, but it's not clear how much.
The company says the facility follows "all applicable laws" and regulations.
"Our due diligence processes are applied and monitored on an ongoing basis to comply with applicable law," said EverWind Fuels in a statement.
That shipment by the Lilac Victoria was the most recent from Jamnagar to Canada.
In total, trade data obtained by CBC News showed since the start of Russia's full-scale invasion of Ukraine since 2022, there were 18 other tankers that brought in refined petroleum products to Montreal, Quebec City, Nova Scotia and New Brunswick refineries. None of those vessels have been named as part of the shadow fleet.
Global Affairs did not respond to a request for comment.