Russia Launches State Insurance Firm for Arctic Oil Shipments

Russia is set to establish a state-backed insurance company aimed at supporting oil and commodity exports along the Northern Sea Route. This initiative, confirmed by various Russian media outlets including Izvestia and Neftegaz, comes in response to ongoing Western sanctions that have significantly impacted the country’s shipping and reinsurance sectors.

The new insurer is being developed with the backing of the Ministry of Finance and the Bank of Russia. It will provide coverage for vessels transporting crude oil, liquefied natural gas (LNG), and other raw materials through the Arctic corridor to Asia. This move is especially crucial as many international reinsurers have withdrawn from this market due to the sanctions.

According to Energy Intelligence, the planned insurance company will likely operate alongside the Russian National Reinsurance Company. Established in 2016, this entity has been managing risks associated with sanctions but is currently facing restrictions regarding its capital and international recognition. Officials familiar with the discussions indicate that the new firm will centralize underwriting for Arctic shipping, particularly for tankers serving Novatek‘s LNG terminals and projects by Rosneft in northern Russia.

Strengthening the Northern Sea Route

The creation of this insurance firm aligns with Moscow’s broader ambitions to enhance the Northern Sea Route’s freight capacity to over 200 million tonnes by 2030. Currently, the throughput along this route remains modest, with Russia reporting approximately 37.9 million tonnes shipped in 2024. Nevertheless, government and industry projections suggest potential cargo flows could range widely from about 224 million tonnes in a baseline scenario to as much as 270 million tonnes by 2030-2035.

Business analysts believe the proposal emerged after several Asian insurers opted not to renew policies for tankers associated with sanctioned operators, prompting Moscow to seek a domestic safety net. The policy framework for the new insurer is still under review, but it effectively aims to replace Western reinsurance layers for Arctic shipments.

This initiative follows years of reliance on older vessels, often referred to as Russia’s “shadow fleet,” which continue to transport sanctioned crude oil with limited transparency. Reports indicate that the new insurance framework could be formalized before the end of this year, coinciding with the next phase of Arctic tanker fleet expansion.

As Russia moves forward with this plan, the implications for its oil and shipping industries could be significant, highlighting the ongoing adjustments the country must make in response to the evolving geopolitical landscape.