In the first quarter of 2023 there was a 225%1 increase in ‘dark activity’, where vessels switch off their Automatic Identification Systems (“AIS”) and become untraceable, masking illicit or sanctionable activity, such as loading Russian oil. During these ‘dark’ periods, an estimated 524 ship-to-ship (“STS”) transfers of crude oil occurred compared with 161 in the first quarter of 2022,2 prior to the implementation of Russian sanctions. Our last blog discussed these deceptive practices in more detail.
A proportion of these vessels are likely part of ‘shadow fleets’. Since the Russia sanctions, numerous vessels have been identified as unregistered with a flag state, the International Maritime Organisation (“IMO”), or commercial insurance and appear to frequently switch off AIS to mask Russian oil movements.3 Estimates put this fleet at 300 to 600 tankers,4 approximately 10% and 7% of the world’s crude and product tankers, respectively.5
In this blog we discuss the EU’s latest measures to tackle these practices and the potential impact on the maritime industry.
In addition to tackling the rise of deceptive shipping practices, the measures also aim to prevent Russian oil entering the EU via third countries,6 such as China, India, and Turkey, where Russian crude can be refined, and the products legally sold on to EU buyers with the non-Russian refinery listed as the origin.
In May 2023, the EU’s High Representative for Foreign Policy stated “We in the EU don’t buy Russian oil, but we buy the diesel obtained by refining this Russian oil somewhere else. This has the effect of circumventing our sanctions and our member states should take measures to deal with this.”7
According to the latest announcement, the ban on ‘shadow entities’ would comprise a ban on port access for tankers that:
Despite concerns about whether such actions were “legally or technically possible” 9 on 23rd June 2023 the proposal was adopted.10
Vessels have various legitimate reasons for switching off AIS and engaging in STS transfers. There will likely be challenges enforcing a mechanism that only targets vessels undertaking these activities to engage in illicit or sanctionable activity.
The official text reportedly proposes a notification system between EU member states to flag vessels,11 although scepticism remains about the effectiveness of such measures. However this builds on measures supported by the IMO in March 202312 requiring vessels to update STS operational manuals and notify their flag states when engaging in mid-ocean operations.
Whilst the official text of the EU’s 11th sanctions package is still to be released, given the challenges to its practical implementation and enforcement, the focus on these practices will likely put pressure on organisations to enhance their identification of illicit and sanctionable activity. For example:
To avoid cases like the Maersk Magellan which can result in additional operational costs and potential brand impact, organisations should have in place a robust maritime sanctions compliance framework that is:
Our team has extensive experience supporting clients such as energy supermajors in uplifting and enhancing their maritime sanctions risk management frameworks, utilising deep regulatory and industry expertise to enable the successful delivery of value-add outcomes across each of the areas listed above. If you would like to speak to our experts, please get in touch with a member of our team.
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References:
2Ibid.
3Greek Companies and Ghost Ships Help Russia Evade Sanctions and Export Oil (foreignpolicy.com)
4IMO: Up to 600 tankers operate as 'dark fleets' - SAFETY4SEA
5Welcome to the dark side: The rise of tanker shipping’s ‘shadow fleet’ (freightwaves.com)
611th package of sanctions (europa.eu)
7Some clarifications on the circumvention of EU sanctions against Russia | EEAS (europa.eu)
811th package of sanctions (europa.eu)
9EU persists with dark fleet sanctions despite enforcement difficulties :: Lloyd's List (informa.com)
1011th package of sanctions (europa.eu)
12IMO: Up to 600 tankers operate as 'dark fleets' - SAFETY4SEA
13Maersk Tanker Denied Entry to Spanish Port Over Russian-Linked Oil Transfer (gcaptain.com)