Lebanon swindled out of millions in sanctioned Russian fuel scheme

Energy-starved and bankrupt, Lebanon has lost tens of millions of dollars importing western-sanctioned Russian fuel in an alleged scheme that authorities suspect involved falsified shipping documents to conceal its origin.

Based on leaked documents, shipping papers, vessel-tracking data and interviews with oil analysts, The National can reveal that international traders potentially billed Lebanon by up to 70 per cent above value for its Russian fuel imports, allowing them to pocket hefty pay-offs in contravention of the Group of Seven's (G7) sanctions on Russia.

The National reviewed shipping manifests that listed several cargoes as coming from Turkey or Egypt. But confidential documents revealed that authorities suspect the papers were amended to conceal that the fuel originated from Russia, citing “discrepancies” with tracking data and asking the public prosecutor to investigate suspected “falsification”.

IMF to hold talks with Lebanon on reform programme

Read More

One of the shipments under investigation by Lebanese authorities attempted to slip out of the country’s waters on Saturday after turning off its trackers, but was stopped by the Lebanese armed forces, which detained the crew.

The G7 imposed strict sanctions against Russia, targeting its economy, including the oil industry, in response to its war in Ukraine.

Sanctions do not prohibit buying oil from Russia outright, but have placed a ceiling on the price it can sell it. Since 2023, the price cap for fuel oil has been set at $45 a barrel, well below market levels, to limit Moscow’s profits.

Leaked documents show that traders sold Russian fuel oil to Lebanon well above the cap allowed by G7 sanctions, skimming off millions on each shipment and possibly evading sanctions.

“Most sanctions regulations also prohibit foreign persons from causing someone to violate sanctions,” said David Tannenbaum, director at Blackstone Compliance Services, a Washington-a consulting firm that provides the maritime industry with sanctions advice.

“Therefore, anyone involved in such transactions, such as the shipowners or the goods traders, could be held accountable,” Mr Tannenbaum, who has worked with the US Treasury’s Office of Foreign Assets Control (OFAC), added.

Asked about the Russian fuel imports, Lebanon’s judiciary said it could not comment as there is an ongoing investigation into the matter.

Lebanese customs said it had opened a separate investigation weeks ago into “uncertainties” about fuel imports, but declined to provide further details.

The investigations were opened after Lebanese engineer Fawze Mechleb filed complaints on June 12 with the judiciary and customs that traced dozens of tankers arriving in Lebanon to Russia.

In his complaints, he alleged that traders routinely altered shipping manifests to disguise sanctioned Russian fuel as Mediterranean, thereby overcharging Lebanon and breaking international and local regulations.

“It's been two months since I first flagged the case. The authorities have so far failed to take any firm action,” he told The National.

Millions squandered

Vessel tracking data collected by energy analyst Marc Ayoub, along with a research consortium including the Legal Agenda and The Lebanese Foundation for Renewable Energy (LFRE), show that at least 20 oil tankers have arrived from Russia in Lebanon since 2023.

Mr Ayoub said that Russian imports sold above the price cap have drained tens of millions of dollars over the past two years from cash-strapped Lebanon, an estimate based on Ministry of Energy and Water (MoEW) figures reviewed by The National.

He added that the consortium shared its preliminary findings with MoEW in May 2025, based on a research project into fuel imports, which is ongoing.

His data also show that 60 per cent of shipments from Russia to Lebanon have conducted a ship-to-ship transfer (STS) at some point in their voyage.

Although widespread and sometimes legitimate, OFAC considers STS a red flag for sanction evasion, smuggling and tax schemes because they make shipments, their origins and quality harder to trace.

These findings come as Lebanon reels from a decades-long energy crisis, with the state barely able to provide a few hours of electricity a day and the public utility, Electricite du Liban (EDL), in chronic deficit.

Accusations of rampant corruption, mismanagement and lack of investment in the sector have deprived the Lebanese of their basic right to affordable power.

In 2020, a scandal over the import of low-quality fuel, involving arrangements of dubious legality, falsified laboratory tests and bribes to Lebanese officials, resulted with US in 2023 sanctioning two businessmen tied to the trade, Teddy and Raymond Rahmeh.

Following the revelations, the contract was replaced the following year by a deal with Iraq, under which Lebanon imports heavy fuel oil from Iraq on deferred payment terms.

Because the fuel does not meet local specifications, Lebanon swaps it on the international markets for types of fuel suitable for its power plants through monthly tenders, based on which traders participate and allegedly make a profit.

These deals, once touted as highly competitive, are now under scrutiny for fresh malpractice claims.

To avoid abuses, the new contracts, seen by The National, were amended by the MoEW to include a clause requiring vessels to carry a tracking transponder.

But energy expert Marc Ayoub said Lebanon never subscribed to the software that would allow it to follow the vessels.

A yearly subscription to such software is around $18,000, which would allow Lebanon to monitor the dozens of oil tankers carrying cargo worth millions arriving at its shores each year.

Experts who have access to tracking software shared the data with The National for the investigation.

“The main problem is that the ministry is blind; it does not know from where the vessels initially come, because it has not taken any actions regarding the monitoring and mapping of the routes,” he said.

The negligence has proven costly.

The cap violation has been ongoing since early 2023, beginning under the Najib Mikati cabinet formed in 2021.

At the time, Walid Fayad was the energy minister.

The National traced three of these vessels, pointing to what appears to be a pattern of murky shipping practices.

Market price vs cap

On July 25, the Minerva Antonia, supplied by Iplom International SA, left the Russian port of Novorossiysk carrying 33,841 tons of fuel oil bound for Lebanon.

This could have been a great bargain for Lebanon. Because of its Russian origin, the shipment should have been sold at about $10 million. But Lebanon allegedly never saw the discount and paid around $17 million for the shipment, documents show, around 70 per cent above its value.

“This difference represents an organised waste of public funds amounting to millions of dollars,” Mr Mechleb, who investigated the vessel, said.

It remains unclear whether Lebanese authorities knowingly imported overpriced shipments or if they failed to perform due diligence.

Documents show that at least another vessel supplied by Iplom was directly from Russia in May.

Iplom did not reply to The National’s request for comments.

Following Mr Mechleb's complaints, the MoEW publicly admitted that oil tankers certified as Russian-origin have been continuously entering Lebanon since 2023, while denying any violation of G7 sanctions.

Authorities said it was the responsibility of oil traders, not theirs, to implement the sanctions “price cap” on Russian oil.

Asked about sanctions evasion, a representative for the MoEW told The National that the “contract in question was signed before the formation of the current government.”

“Once we became aware of the price cap issue, we immediately engaged with the Council of Ministers and took corrective measures, including amending the tender specifications to safeguard public funds,” they added.

MoEW later amended the contracts to include a clause mandating compliance with international sanctions.

For energy expert Ayoub, this is “not enough.” He said the contracts remain riddled with shortcomings, allowing companies to exploit loopholes at the expense of the Lebanese state.

Among other urgent changes, he stressed that automatic tracking system results should “become mandatory,” especially in Lebanon’s energy sector, which has long been rife with corruption.

Concealing the origin

Though Iplom did not conceal the fuel's origin, other cases traced by The National appeared to have covered their tracks, with Lebanese authorities suspecting traders of having misrepresented Russian cargoes as Turkish or Egyptian.

“Sanctions evaders frequently use fraudulent documents to either mask the origin of the goods, or sometimes, as far as the price cap is concerned, to alter the price,” Mr Tannenbaum said.

“Turkey and Egypt are two jurisdictions where we frequently see Russian oil and petroleum being passed off as non-Russian,” he added.

Among the suspicious vessels delivered to Lebanon is Hawk III, suspected of carrying Russian oil disguised as Turkish to inflate prices.

On Saturday, the vessel, under investigation by authorities, attempted to flee Lebanese waters, cutting off its AIS and radio signals in the middle of the night before sailing out of Lebanon without authorisation.

But the Lebanese army deployed helicopters and marine commandos, intercepting the vessel 30 nautical miles offshore, after shooting warning shots at the vessel, which refused to comply with the military's orders.

The army reported in a statement that three soldiers were injured in the operation, and 22 crew members were arrested.

The Lebanese customs confirmed to The National the opening of an investigation. They said they issued a fine but did not disclose further information on the nature of the probe.

Experts interviewed by The National raised a series of red flags about the shipment.

“This transaction contains numerous red flags that point to the cargo likely being Russian, and not Turkish in origin,” Mr Tannenbaum said.

Yet, the contract seen by The National showed the shipment was sold at market price, at around $18 million, roughly $7 million above the price cap for Russian fuel oil.

The Hawk III first departed Russia, then docked in Mersin, where shipping documents listed the fuel’s origin, before sailing to Lebanon, where the fuel was delivered in August.

But tracking data showed that the Hawk III had been broadcasting its destination as Lebanon, not Turkey, since it left Russia, including on its approach to Mersin.

The crew controls what the transponder transmits. “That’s essentially the equivalent of the crew saying the quiet part out loud,” Mr Tannenbaum said.

Another red flag is that data shows the vessel stopped at an offshore storage, the Nergis terminal pipeline in Mersin.

“Discharging and then reloading new cargo at this terminal in Mersin does not make financial sense,” he added.

The vessel is also part of a fleet that heavily deals in Russian oil and petroleum products, Mr Tannenbaum continued.

Finally, the shipper listed on the certificate of origin, Bahe Enerji, is a company newly formed in 2023 and owned by an Azerbaijani national.

This might be yet another red flag. Oil traders established after the price cap’s implementation have come under increased scrutiny, as such companies may have been created to deal specifically in Russian crude or Russian dark fleet, referring to the tankers helping Moscow to ship oil around sanctions.

HAWK III is owned by SR Navigation SA, a Panama company domiciled in Greece, meaning the transaction would have involved an EU entity, which is directly prohibited by sanctions.

Sahara Energy Resources DMCC, which sold the oil to Lebanon, said it would not comment, as long as the investigation is continuing, while stressing the probe was not “directly” related to the company.

The MoEW referred the case to the public prosecutor as a complaint at the Court of Cassation and held up the delivery until laboratory tests were conducted, which found the shipment suitable, but did not give indications on its origin.

The fuel was unloaded last week, despite the investigation still ongoing. The vessel tried to escape with fuel days later.

In a statement on X, Lebanon's Minister of Energy Joseph Saddi, said that his ministry is still awaiting any indication from the judiciary to take action on the contractual relationship with the supplier company.

Red flags

The MoEW is well aware of the shipments' many irregularities.

A few weeks ago, Mr Saddi sent a letter to the public prosecutor, requesting further investigation into another suspicious shipment of gas oil sold in June by BB Energy DMCC, an oil trader dealing with Lebanon, over suspicions that the certificate of origin was falsified to disguise Russian fuel as Egyptian.

“The discrepancy in the data and documents, especially concerning the acquisition of certificates of origin from Port Said, indicates fraudulent documents and a circumvention of the contract's binding clauses,” the document, obtained by The National, read.

The representative of MoEW confirmed to The National that it has asked the judiciary to further investigate allegations of document falsification.

The vessel that first came under scrutiny is called TM Hai Ha 568, which Lebanon’s chief public prosecutor has been investigating since Mr Mechleb’s June complaint. According to tracking data, it began its voyage in Russia in May, stopping off the coast of Cyprus, where it parked for several days, conducting STS procedures.

“It's not uncommon to see illicit shipments undergo multiple STS transfers during a voyage,” Mr Tannenbaum said.

TM Hai Ha 568 later docked at Port Said, Egypt, where the certificate of origin, seen by The National, stated the shipment had originated, and arrived in June for Lebanon.

In its letter to the judiciary, MoEW said it suspects the vessel did not load any products in Egypt and asked the courts to verify the authenticity of the documents.

BB Energy denied any wrongdoing in an email to The National.

“BB Energy has not concealed the origin of the fuel and would have no reason to do so, since Russian oil, below the international price cap, can be legally imported. BB Energy always complies with national and international law, including Russian-related sanctions,” the email read.

It added that the company is not legally responsible for “the vessel’s voyage from the loading port to the Lebanon discharge ports” or for supplying the vessels, and was "not involved" in any STS procedures, because it purchased the oil at “Delivery at Place” (DAP).

In these types of deals, the seller is responsible for arranging and paying for transportation, while the buyer’s responsibility begins only after the goods are unloaded.

BB Energy told The National that it acted as a buyer, saying it “bought the gas oil delivery in Lebanon and sold it in Lebanon.”

"BB Energy purchased and sold on a DAP Lebanon basis and was not involved in the vessel voyages, including any STS procedures," BB Energy said.

The National reviewed material indicating that BB Energy was contractually responsible for procuring and delivering the cargo to Lebanon, pursuant to its contract as the “seller” with the ministry.

The MoEW has yet to announce any sanctions against companies under investigation, which, to date, continue to win tenders.