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The UK government has imposed sanctions on Dubai-based oil trader Paramount Energy & Commodities DMCC as part of a swath of actions against companies and individuals accused of supporting Russia’s gold, oil and finance industries.
The sanctions, which target 29 people and entities including several based in the United Arab Emirates, “will hit those who provided succour to [Vladimir] Putin by helping him to lessen the impact of our [existing] sanctions on Russian gold and oil”, said UK foreign secretary James Cleverly.
The Financial Times reported in March that Swiss-based Paramount Energy & Commodities SA, founded by veteran Dutch trader Niels Troost, had transferred its Russian oil trading activity to a subsidiary in the UAE called Paramount DMCC.
Troost, who has not been targeted by UK sanctions, has long maintained that western restrictions on the trade in Russian oil — introduced in response to its full-scale invasion of Ukraine last year — do not apply to Paramount DMCC because it is a separate legal entity from its Swiss parent company and is incorporated outside the G7.
Emirati companies can legally buy and sell Russian oil at any price, as long as they also use non-European shipping and financial service providers.
The UK’s Foreign, Commonwealth & Development Office said that Paramount DMCC “is known to employ deceptive shipping practices as well as opaque ownership structures, and has been used by Russia to soften the blow of oil-related sanctions imposed by the UK in co-ordination with G7 partners”.
The UK also sanctioned Dubai-based Swiss national François Edouard Mauron, who was formerly a director of Paramount DMCC but told the FT earlier this year that he had stepped down. Paramount SA, Paramount DMCC, Troost and Mauron did not immediately respond to requests for comment.
The move to target a Dubai-based oil trader marks an escalation of the UK’s sanctions regime at a time when the G7’s price cap on Russian oil has become less effective.
The measure, introduced last December for sales of crude, was supposed to cap the price at which Russia’s oil could be sold to $60 a barrel, in a bid to crimp the Kremlin’s revenues while keeping enough oil in the market to avert a counterproductive price spike.
But Russia’s establishment of a “dark fleet” of dozens of tankers operating outside western markets, along with other methods of subterfuge deployed to circumvent the cap, has helped the average price of Russian oil to rise well above $60 a barrel in recent months.
Jason Hungerford, a sanctions lawyer at Mayer Brown, said that the new UK sanctions followed US measures targeting a Russian natural gas project last week, suggesting G7 members are now prepared to target energy more aggressively.
“The various sanctioning countries are trying to demonstrate that they’re serious about the measures they’ve imposed on [the] Russian oil and gas trade and are stepping up enforcement,” said Hungerford, a partner at the law firm.
“Going after traders and last week’s action against Russia’s Arctic 2 LNG project by the US is a major sign that the next front is pushing on the Russian energy sector harder than in the past.”
The British measures block access to financial services, freeze any UK assets, prevent targeted entities from chartering vessels to British ports, and ban targeted individuals from travelling to the UK.
The UK also placed sanctions on a UAE-based network that it claims is responsible for channelling more than $300mn in gold revenues to Russia, which is the world’s second-largest producer of bullion.
Named as part of the network was Paloma Precious DMCC, the owner of the Emirates Gold refinery that was suspended in July from delivering gold into Dubai and London amid money-laundering concerns.
In September, London-listed Rockfire Resources announced an agreement to buy Emirates Gold from Paloma Precious DMCC as long as the refinery was allowed to deliver bullion into Dubai once again.
Paloma Precious was the largest shareholder of Rockfire Resources until it sold its entire stake in the same month.
Paloma Precious and Rockfire did not immediately respond to requests for comment.