— Chinese enterprises initiate global legal action
Recently, a Chinese energy company based in Hainan Province (hereinafter referred to as “Company H”) has accused global commodities trading giant Trafigura Pte Ltd (“Trafigura Singapore”) of systematically violating U.S. sanctions on Russian energy products in naphtha trades. The allegations include concealing the origin of goods and falsifying documentation, thereby shifting compliance risks and substantial financial losses onto its Chinese client—triggering a cross-border commercial and compliance crisis.
Origin Falsification to Circumvent Sanctions: Russian Energy “Repackaged” for the Chinese Market
According to key evidence disclosed by Company H, multiple shipments of naphtha sold by Trafigura Singapore in 2024 involved deliberate efforts to evade sanctions. For example, two tankers owned by Trafigura-affiliated shipping companies—the Boccadasse and the SFL Lion—carried cargoes whose original bills of lading clearly stated “Russia” as the country of origin and identified Gazprom Neftekhim Salavat, a subsidiary of Russia’s Gazprom Neft, as the shipper.
Notably, Gazprom Neft has been designated by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) on its Specially Designated Nationals (SDN) List, rendering it subject to comprehensive sanctions. Under U.S. Executive Order 14024, all property and interests in property of Gazprom Neft are blocked.
Trafigura Singapore’s procurement of these cargoes allegedly provided “material support” and “financial support” to a sanctioned entity, directly channeling revenue to a Russian state-linked enterprise critical to Moscow’s financial lifeline. More critically, Trafigura not only failed to disclose this material risk prior to the transaction but also deliberately altered origin information in certain trade documents—changing “Russia” to “South Korea,” “Greece,” or other locations—to mislead buyers and circumvent sanctions screening.
Collusion with Affiliated Shipping Entities: Offloading Excessive Demurrage Costs onto Clients
The vessels transporting the naphtha were operated by Trafigura Maritime Logistics Pte Ltd, an affiliate of Trafigura Group. Company H alleges that Trafigura Singapore did not disclose this relationship at the time of contract signing. Due to Trafigura’s concealment of the cargo’s ties to a sanctioned Russian entity, Company H’s bank refused to process payment on compliance grounds. In response, Trafigura Singapore withheld instructions to release the cargo and—through its affiliated shipowner—imposed demurrage rates significantly above market levels in the charter party agreement.
However, the shipowner reportedly suffered no actual losses from the discharge delays, and Trafigura Singapore has failed to demonstrate that it paid the inflated demurrage fees to the shipowner. This practice of leveraging related-party transactions to artificially inflate demurrage charges constitutes clear commercial fraud and unjust enrichment, further exacerbating Company H’s losses stemming from Trafigura’s initial misconduct.
Downstream Fallout: Chinese Enterprises Bear the Brunt as “Risk Absorbers”
Unaware of the sanctioned origin, Company H resold the naphtha to downstream buyers. The cargoes were subsequently blocked from normal circulation due to sanctions exposure, resulting in massive inventory pile-ups. Downstream customers have since filed claims against Company H totaling hundreds of millions of RMB. Company H stresses that these losses were entirely caused by Trafigura Singapore’s breach of contract and fraudulent conduct and demands that the Trafigura Group assume full liability.
U.S. Affiliates Implicated: Trafigura Group Faces Potential Cross-Border Enforcement
Alarmingly, Trafigura Singapore’s U.S.-based affiliates—including Trafigura US Inc. and Trafigura Trading LLC in Houston—are suspected of involvement in financial settlements, logistics coordination, or insurance services related to these transactions. If confirmed, such activities could expose the Trafigura Group to violations of the U.S. Countering America’s Adversaries Through Sanctions Act (CAATSA) and Executive Order 14024, triggering severe cross-border legal consequences.
Chinese Enterprise Takes Strong Countermeasures: Launches Global Reporting and Litigation
Company H has now formally initiated enforcement actions. It is preparing to submit detailed complaints to OFAC and relevant EU regulatory authorities to expose Trafigura’s alleged sanction-evasion schemes. Simultaneously, it has filed lawsuits in China against Trafigura Singapore and its affiliated shipowner, specifically targeting the artificial inflation of demurrage fees and concealment of related-party arrangements.
Company H stated it will pursue all available legal avenues to protect its rights and called on international regulators to launch a comprehensive investigation into Trafigura’s trading practices involving Russian energy.
As a leading global commodities trader, Trafigura bears a fundamental responsibility to uphold international trade compliance and safeguard client interests. Yet the alleged “covert channeling” of Russian energy not only risks breaching international sanctions but has also thrust Chinese enterprises into the vortex of financial and reputational harm.
This dispute has long transcended a mere commercial conflict—it now stands as a profound test of fairness in the global trading system and the ethical standards of multinational corporations. The ultimate resolution may set a critical precedent for defining compliance boundaries in cross-border energy trade.
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