Sanctions imposed on countries including Iran, North Korea and Russia have led to a parallel world where oil from those countries is traded in the shadows.

The operators of vessels that transport cargoes subject to sanctions go to great lengths to either be unseen on the surveillance systems, primarily AIS, that now monitor the world’s oceans or to fool them. These deceptive shipping practices are becoming increasingly sophisticated.

However, a small number of specialist maritime intelligence companies monitor ships engaged in sanctions evasion using technology, a lot of thorough trawling through databases and a questioning approach to outward appearances.

World Bunkering talked to one these companies, UK headquartered, Pole Star Global, to gauge to what extent sanctions evasion was an issue for the bunkering industry.

Its VP Commercial Markets, Capt. Steve Bomgardner explained the two  key emerging sanctions concerns – the creation of a “Dark fleet” of tankers and proliferation of ‘AIS spoofing’.

The Dark Fleet is a fleet of about  650-700 tankers owned and operated by people outside of  jurisdictions that enforce sanctions. These ships have been  acquired specifically for trading with Russia or other sanctioned countries.  Owners will go to great lengths to disguise their stakes in these vessels. Pole Star goes to similar lengths to uncover them.

The US Office of Foreign Assets Control (OFAC) and other sanctions authorities have outlined an attestation process to document that Russian oil sales are within the price cap imposed by the G7 group of countries.  However, according to Pole Star, this is not a mere record-keeping problem. The current price cap for oil leaves very little room for margin, leading to attempts to falsify documentation, pass goods off as being of non-Russian origin, or violate other sanctions outside the price cap, (and with no safe harbour provisions), such as acting on behalf of a blocked party or attempting to export oil to a country that enforces sanctions.

Bomgardner said that many ship-to-ship (STS) transfers took place involving the Dark Fleet. However, it was difficult to say when a transfer of fuel broke sanctions or to prove that oil was sold above the price cap. It was also difficult to track fuel from illegal cargoes to eventual supply as bunkers. He said there was tendency to turn a blind eye to the origin of the fuel.

Another major concern is the use of spoofing or faking a vessel’s position on AIS.  He explained how AIS spoofing can work.  A typical example would be tankers apparently, according to AIS, located off  West Africa actually being in  a Venezuelan port on the other side of the Atlantic loading oil in contravention of US sanctions.

Unsurprisingly the authorities in the US and elsewhere have warned businesses involved in shipping to be aware of evasion attempts. In April, OFAC specifically singled out P&I clubs, ship owners, flag registries, and commodities brokers to remain vigilant for deceptive shipping practices as evidence of sanctions evasion. Bomgardner said that while some service providers such as P&I clubs and flag registries had sprung up just to support the Dark Fleet some vessels posing a high risk continued to be served by reputable organisations.

There are complications. Dark Fleet vessels are not used exclusively for sanctioned trade – and not all vessels present the same level of risk. For instance, they may be shipping oil within the confines of the price cap. However, they do present an increased risk to those in the bunker business. The advice is to be careful when dealing with a Dark Fleet vessel and conduct enhanced due diligence on the provenance of the cargo, the buyer and the seller.

That is where companies like Pole Star come in. They can undertake checks that enable businesses to discharge their due diligence responsibilities. Given current geopolitics their services are likely to be needed for the foreseeable future.

However, Bomgardner concluded by saying that the risks of bunkering companies falling foul of sanctions enforcement could be reduced by using electronic documentation, as in electronic bunker delivery notes. As that is indeed the direction of travel in the bunker sector, perhaps there is some reason to be optimistic.

VP Commercial Markets, Capt. Steve Bomgardner

Source: World Bunkering Q1 2024

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