A Russian-chartered oil tanker in Moroccan waters in an area identified by maritime technology company Windward as a center of oil smuggling.
Europa Press | getty images
The U.S. Treasury Department’s Office of Foreign Assets Control on Thursday announced sanctions on three ships and shipping companies for violating Russian oil sanctions, just days after the Treasury sanctioned nearly 30 ship management companies covering 100 suspicious vessels. Launched a separate, larger investigation. Of violating the price limit on Russian oil.
“Shipping companies and vessels participating in Russian oil trade when using Price Cap Coalition service providers should fully understand that we will hold them accountable for compliance,” Treasury Deputy Secretary Wally Adeyemo said in a statement Thursday. ” “We are committed to maintaining market stability despite Russia’s war against Ukraine, as well as cutting off the profits being used by the Kremlin to finance its illegal war and facilitate price cap evasion. We remain steadfast in our efforts towards the people.”
But as Treasury looks to cut off the Kremlin’s access to oil profits, its search for crude tankers and shippers that violated OFAC guidelines is revealing the complexities within its own guidelines and a shady maritime industry.
The shipping units identified on Thursday were based in the United Arab Emirates. The ships were Ligovsky Prospekt of Kazan Shipping Incorporated, Progress Shipping Co Ltd, and Galleon Navigation Incorporated’s NS Century. But while those ships are now UAE-based, Matthew Wright, lead analyst for freight at maritime intelligence firm Kpler, tells CNBC that the location where the company is based may be different from the location of the beneficial owner. In this case, Wright says the beneficial owner is likely still Russian-based.
“Based on the history of these fleets, all of these vessels were owned and operated by Sovcomflot,” Wright said. “Management of all Sovcomflot vessels was transferred to Sun Ship Management in March/April 2022 when their offices in Europe were closed. Those three companies are now managed by a new manager called Oil Tanker SCF Management, but that’s just There is another name. ‘Owned’ This has changed since 2006. They are not actually part of the dark or gray fleet as I still consider them Russian owned.”
30 ship owners targeted in new Treasury investigation
This is just one example of the uncertainty prevalent in the Russian oil trade. The investigation launched earlier this week against 30 shipowners shows that identifying ships crossing the oceans with sanctioned oil and finding evidence is not as easy as early headlines covering the Treasury’s allegations made it out to be It is mentioned in. These companies received warning letters from the government regarding activity considered suspicious and requests for documentation. There are gray areas in the US government’s Russian oil guidelines, although efforts may eventually lead Marine investigators to the truth.
In the US Treasury’s “Preliminary Guidance on the Implementation of the Maritime Services Policy and the Related Price Exception for Maritime Russian Oil”, shipowners are placed under the Tier 2 category. According to the Treasury, this group within the maritime industry are “actors who are sometimes able to request and receive information of value from their customers in the ordinary course of business.”
If a shipowner is unable to obtain such pricing information, according to Treasury guidelines, Tier 2 actors (shipowners) are required to request “customer verification”, where their charter customers pledge in a document that: They are certain that they will not buy maritime Russian oil at a higher price than this. price range.
This document can provide a “safe harbor” for shipowners who are relying on that customer’s “certification” to comply with sanctions. This safe harbor also extends to ship insurance companies.
“Ship owners rely on the charterer to provide sufficient evidence that Russian oil on board has been sold below the price limit,” said Andy Lipo, president of Lipo Oil Associates. “Sanctions can be easily avoided if an unscrupulous charterer presents documents that misrepresent the true price of oil.”
Lipo said one clue to the suspicious paperwork is an oil price that is well below market, with Russian crude selling for $50 a barrel in Asia today when Brent is trading at $80.
“That’s a red flag,” Lipo said.
Depending on the safe harbor, if the shipowner or management company can be cleared of wrongdoing, the documents can still be traced to the treasury to the charterer.
The US Treasury told CNBC it does not comment on current investigations.
Russian oil tracking
A breakout of Russian oil trade by Kpler shows that about 30% of Russian exports from Western ports are still using commercial shipping with beneficial ownership within the EU.
Wright said this “dark fleet” typically includes ships 20 years and older that have loaded or primarily loaded Venezuelan or Iranian cargo in the past few years.
“There is often some evidence that they are hiding their activities by turning off their AIS, but not in all cases,” Wright said, referring to the automatic identification system used by marine vessels to track location. ” “Ownership is often opaque and the operator does not engage in standard commercial shipping other than operating these vessels.”
There are also “Gray Fleet” Ships sold since the Russian invasion of Ukraine for the purpose of transporting Russian exports and avoiding sanctions. According to Wright, these ships are owned by the European Union.
“The majority of vessels have been sold by Europe-based owners to owners who were not previously active in the tanker market,” he said. “The owners are primarily based in Hong Kong, China, India and the United Arab Emirates.”
Price ceiling rules state that exports of Russian crude or refined products to the EU on owned, insured, or serviced tonnage must be below the relevant price ceiling.
Wright says most exports from Russia are considered to be above limits since July, yet a large number of ships continue to trade from within the EU. This is because of the way Russian crude is traded.
Wright said, “It is very possible that ships loading EU-owned Russian cargo will have documentation showing trading of crude below the price ceiling, even if the cargo actually traded above the price ceiling. Has gone.” “This is because a charterer or middleman may have traded it at a price which can be shown to the owner as part of a wider trade with the ultimate buyer. The (ship) owner is unlikely to have any evidence to the contrary. Is.”
Ship owners do not submit these documents, but they are provided to them by the charterer, he said.
“Shipowners are simply custodians of the information provided to them,” Wright said.
Bex Shipmanagement & Trading confirmed to CNBC that it was among the companies that received warning letters from the Treasury this week and are sending documents to the government. The companies were identified in earlier press reports, although Treasury declined to specify the companies that received the letters.
In an email to CNBC, the company rejected Treasury’s allegations. Becks said, “Despite the fact that the U.S. Treasury Department requested voyage details from 30 different ship managements, including 100 ships, this is a clear bad faith and reputation-damaging objective that has been reported recently in the media. Only our management company was mentioned in the news broadcast.” The spokesperson wrote.
The Turkey-based company in October announced the deployment of SpaceX’s Starlink satellite connectivity system to its fleet of 40 bulkers and tankers for advanced vessel tracking.
“Our vessels trade worldwide and their tracking systems are always in working order. We operate our vessels in compliance with all international laws and regulations without violating any clearance regime,” the company wrote in an email. Are.”
Bex said it is conducting due diligence processes on all of its travels as well as carrying out the necessary clearance checks with its London-based lawyers.
According to Kpler, Bex Shipmanagement’s fleet had several tanker port calls in Russia since the sanctions began on February 24, 2022. An example is the oil product tanker Beck Aqua.
Kepler was able to track the tanker’s journey using the tanker’s satellite beacons via the AIS short-range coastal tracking system currently used on ships.
The tanker Bex Aqua arrived at the Russian port of Nakhodka on 26 October and was loaded with diesel or naphtha on 1 November. The ship arrived at the port of Singapore on 10 November and left empty on 14 November.
But following satellite data does not allow understanding contract prices.
“Although we can track the ship’s journey from Russia to Singapore, unless we have the sales contract, we do not know at what price the oil product was purchased,” Lipo said. He said, “The only facts we have are that companies like Bex Shipping are employed to carry Russian oil. It’s possible that someone filed false paperwork with the ship owner. That’s why the Russian oil sanctions are being monitored.” It’s not easy to keep.”
Bex Shipmanagement said the requested voyage details would be provided to the US Treasury with full transparency.
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