- [Reporter] In late May,
three months after the US imposed sanctions on Russian oil,
gasoline made from Russian crude was delivered
to this terminal in New Jersey.
It was later distributed
to gas stations across the East Coast.
It came from this refinery in Italy.
That's because of a US sanctions loophole
that allows banned Russian crude to be refined
in a country outside of Russia and sent to the US.
We tracked ships, pieced together months of commodity data,
shipping documents, and satellite imagery
to reveal how Russia's second largest oil and gas company,
Lukoil, is sending Russian oil refined in Italy
to companies like Exxon in the United States
without violating sanctions.
Our investigation shows
that Lukoil's ISAB refinery in Syracuse, Sicily
represents one of the most extreme examples
of this loophole.
The vast majority of the crude for this refinery
comes from Russia.
It's then refined in Sicily,
after which it's considered Italian
thanks to a longstanding industry practice
that allows the origin of oil to change
based on where it's refined.
The US launched sanctions against Russia
as punishment for invading Ukraine in late February,
banning imports of Russian oil and oil products
as well as blacklisting Russian oligarchs
and companies the US says are close to President Putin.
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Unlike Russia's largest state-owned oil
and gas company, Rosneft, Lukoil was not sanctioned.
Lukoil still has a presence in the US
and distributes oil products to 11 states
according to the company's website.
The only reason it can sell Russian oil into the US
is because it stops at the refinery in Sicily
on its way here.
Lukoil's refinery in Sicily is the second largest in Italy
and the fifth largest in Europe.
Before the war, it brought in and blended crude oil
from at least 15 different countries,
with an average of 30% coming from Russia.
Now, the overwhelming majority of it comes from Russia
because European banks stopped lending money
to the ISAB refinery after Russia invaded Ukraine.
As a result, the Lukoil refinery was no longer able
to buy crude from other countries.
Since April, as much as 93% of its feed stock
is pure Russian crude.
The rest is a Russian-Kazakh blend or Kazakh,
according to data from commodity tracking firm Vortexa.
All of the crude came from Russian ports,
with the most coming from Primorsk.
We see a shipment loading there
in this satellite image from late March.
The vessel here is the SCF Baltica,
a tanker belonging to Russia's
largest state-owned shipping company, Sovcomflot,
a company sanctioned by the US.
Sovcomflot did not respond to our request for comment.
We see the same ship again a few weeks later
delivering that oil to the refinery in Sicily.
It's this crucial stop that eventually allows Lukoil
to sell this oil as gasoline and other products to the US.
A spokeswoman for the US Department of the Treasury,
which administers and enforces sanctions,
declined to comment, but US sanctions state an exception
for any Russian origin good
that has been substantially transformed
into a foreign-made product.
In general, substantial transformation
means that the oil has been changed
through processing or manufacturing, such as refining.
Refining is a process
in which crude is heated and distilled.
While this process technically transforms the crude
into a different product, if the same raw ingredients
used in Lukoil's Sicily refinery were brought to the US,
it would be a violation of sanctions.
The refinery exported almost five million barrels
of oil products to the US since March of this year.
Roughly 2.5 million of those barrels were gasoline.
According to the American Petroleum Institute,
that's enough to fill about seven million
automobile gas tanks.
We traced shipments
delivered to at least seven different buyers
in at least 13 different locations.
Some of this was gasoline.
While we can see where it was delivered,
shipping data doesn't always identify the buyer.
Data shows fuel, oil, and gasoline were purchased
by Exxon and oil trading companies
such as Lukoil's own trading arm, Litasco.
The most oil products sent from Lukoil Sicily
to the US since March went to Exxon's terminal
in Baytown, Texas, just outside Houston.
Nearby, a terminal owned by Magellan Midstream Partners,
a company that transports and distributes oil products,
received the largest amount of gasoline.
A spokesperson for Magellan said,
although they received the shipment,
they were not the buyer
and shipping data does not list one.
Another gasoline shipment, over 300,000 barrels,
arrived at this terminal in New Jersey.
Shipping data indicates the receiver for that delivery
was also Exxon.
A spokeswoman from Exxon said
ExxonMobil is complying with all sanctions
and that deliveries it received are certified products
of Italian origin.
Lukoil did not respond to multiple requests for comment.
Though shipments like these from Lukoil's Sicily refinery
may represent only a fraction of US oil imports,
they reveal how difficult it is to track
and eliminate Russian oil in the US supply chain.
The Lukoil refinery in Sicily
will be forced to stop importing Russian crude
and may have to close when European sanctions banning it
come into effect on December 5th.
In the meantime, at a number of gas stations across the US,
Americans are filling up their vehicles, paying for fuel
that, in part, adds to Russia's profits.
(soft tense music)