# Oil spills and near misses: more ghost tankers ship sanctioned fuel
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-23
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Rising risks: Shadow oil tankers leak fuel, industry
Meta Description: Discover the dangers posed by unvetted tankers in the 'shadow' fleet shipping sanctioned oil, as industry specialists reveal growing accident risks.
URL: https://financedigest.com/oil-spills-and-near-misses-more-ghost-tankers-ship-sanctioned-fuelhtml

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By Jonathan Saul

LONDON (Reuters) – An oil tanker runs aground off eastern China, leaking fuel into the water. Another is caught in a collision near Cuba. A third is seized in Spain for drifting out of control.

These vessels were part of a “shadow” fleet of tankers carrying [oil last year from countries hit](https://www.financedigest.com/u-s-oil-exports-to-europe-hit-record-in-march-on-steep-discounts.html "U.S. oil exports to Europe hit record in March on steep discounts") by Western sanctions, according to a Reuters analysis of ship tracking and accident data and interviews with more than a dozen industry specialists.

Hundreds of extra ships have joined this opaque parallel trade over the past few years as a result of [rising Iranian oil](https://www.financedigest.com/oil-rises-about-2-with-u-s-and-china-inflation-in-focus.html "Oil rises about 2% with U.S. and China inflation in focus") exports as well as restrictions imposed on Russian energy sales over the war in Ukraine, said the industry players, who include commodity traders, shipping companies, insurers and regulators.

“The risk of having an accident is definitely going up,” said Eric Hanell, CEO of tanker operator Stena Bulk. “We might be affected being at a port … because someone is running into us or loses control, which is a much bigger risk on those kinds of ships because they are older and not as well-maintained.”

Many leading certification providers and [engine makers](https://www.financedigest.com/engine-parts-makers-must-cross-valley-of-death-to-reach-ev-era.html "Engine parts makers must cross ‘valley of death’ to reach EV era") that approve seaworthiness and safety have withdrawn their services from ships carrying oil from sanctioned Iran, Russia and Venezuela, as have a host of insurers, meaning there’s less oversight of vessels carrying the flammable cargoes.

Some industry figures [fear this parallel trade carrying tens of millions of barrels of oil](https://www.financedigest.com/oil-rises-on-demand-hopes-as-banking-crisis-fears-subside.html "Oil rises on demand hopes as banking crisis fears subside") around the world could undermine decades-long industry efforts to increase shipping safety following disasters including the 1989 Exxon Valdez spill in Alaska, which caused devastating environmental damage.

Last year there were at least eight groundings, collisions or near misses involving tankers carrying sanctioned [crude or oil](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build") products, including the events off China, Cuba and Spain, according to a Reuters analysis based on ship-tracking information and Lloyd’s List Intelligence data on vessel incidents.

That’s the same number as the previous three years combined, although still a fraction of the overall 61 incidents recorded [across the whole shipping industry](https://www.financedigest.com/digital-transformation-across-the-banking-industry.html "Digital transformation across the banking industry") in 2022, the analysis found.

None of the eight incidents caused any injuries or significant pollution. Some executives are worried, though.

“You have the dark fleet which has not been vetted so much and that is a concern,” said Jan Dieleman, president of commodities group Cargill’s ocean transportation division. “We do not have visibility on maintenance and safety as no one is really boarding the ships and doing checks – that is missing.”

Government officials from Iran, Venezuela and Russia, which do not recognise Western sanctions, didn’t immediately respond to requests for comment for this article.

Several of the shipping players interviewed said [oil producers hit](https://www.financedigest.com/oil-hits-3-week-high-as-china-eases-covid-curbs.html "Oil hits 3-week high as China eases COVID curbs") by sanctions had little choice but to use less tightly vetted vessels to keep their exports flowing and shore up their stumbling economies.

INVISIBLE FLEET?

Estimates of the size of the shadow fleet vary, with industry participants putting the number at anything from more than 400 to north of 600, or roughly a fifth of the overall global [crude oil](https://www.financedigest.com/oil-near-flat-as-us-crude-stock-draw-contends-with-economic-concerns.html "Oil near flat as US crude stock draw contends with economic concerns") tanker fleet.

Our data shows that it has now [reached around](https://www.financedigest.com/metal-powder-market-is-projected-to-reach-a-market-value-of-around-us-20-bn-by-2031.html "Metal Powder Market is projected to reach a market value of around US$ 20 Bn by 2031") 650 units,” said Andrea Olivi, head of wet freight at commodity trader Trafigura, which estimates that two-thirds of that number are crude tankers.

The number of tankers transporting Iranian crude and products – excluding the state’s own fleet – has risen to above 300 this month from 70 in November 2020, said Claire Jungman, chief of staff at U.S. advocacy group [United Against Nuclear](https://www.financedigest.com/uks-competition-watchdog-to-examine-edf-buying-ges-nuclear-turbine-unit.html "UK’s competition watchdog to examine EDF buying GE’s nuclear turbine unit") Iran (UANI), which tracks Iranian-related tanker traffic via satellite data.

Iran’s oil minister said this month that the country’s oil exports had [reached their highest level since](https://www.financedigest.com/soccer-arsenal-reach-womens-champions-league-semis-for-first-time-since-2013.html "Soccer-Arsenal reach Women’s Champions League semis for first time since 2013") the reimposition of U.S. sanctions in 2018, with 83 million more barrels exported in the past year versus the year before.

Meanwhile, economic penalties imposed on Moscow by Washington and other [Western capitals over the Ukraine](https://www.financedigest.com/analysis-russian-gold-removed-from-some-western-funds-after-ukraine.html "Analysis-Russian gold removed from some Western funds after Ukraine") conflict have led to dozens more ships plying the shadow trade, the industry participants said.

Some cautioned that the size of the shadow fleet was becoming more difficult to gauge given the complex layers of compliance around sanctions on [Russian oil](https://www.financedigest.com/oil-gains-as-russian-supply-cuts-temper-concerns-over-rate-hikes-high-stocks.html "Oil gains as Russian supply cuts temper concerns over rate hikes, high stocks"), which is banned from many Western ports and subject to a price cap by G7 countries.

Reuters was unable to independently verify the numbers regarding the [size and growth](https://www.financedigest.com/global-splined-sleeves-market-size-share-trend-growth-forecast-to-2031.html "Global Splined Sleeves Market Size, Share, Trend & Growth Forecast To 2031") of the shadow fleet.

The U.S. Treasury didn’t immediately respond to a request for comment on ships carrying [sanctioned oil](https://www.financedigest.com/russia-unleashes-rockets-after-mariupol-ceasefire-eu-eyes-oil-sanctions.html "Russia unleashes rockets after Mariupol ceasefire, EU eyes oil sanctions"). A State Department spokesperson said the U.S. strove to identify sanctions evasion in the shipping sector in an effort to bolster navigation [safety and minimize the risk](https://www.financedigest.com/british-doctors-strikes-risk-patient-safety-minister-says.html "British doctors’ strikes risk patient safety, minister says") of environmental hazards.

‘ENDANGERED VESSELS’

Among the eight incidents identified last year, the Linda I tanker carrying [Russian oil](https://www.financedigest.com/oil-prices-rise-after-opec-keeps-output-steady-russian-price-cap-imposed.html "Oil prices rise after OPEC+ keeps output steady, Russian price cap imposed") was detained at the southern Spanish port of Algeciras in November, according to the Reuters analysis.

Spain’s Merchant Fleet authority confirmed the incident and the cargo, telling Reuters the vessel had been authorized to pick up spare parts outside [port limits but was found drifting towards anchored ships](https://www.financedigest.com/turkey-says-five-more-grain-ships-leave-ukrainian-ports.html "Turkey says five more grain ships leave Ukrainian ports") due to navigation system faults.

“The vessel was detained for having endangered the vessels anchored in its vicinity and for a series of deficiencies,” said the agency, part of the transport ministry.

The Linda I was also in contravention of U.N. pollution regulations by not having an exhaust gas cleaning system, or scrubber, while using high-sulphur [marine fuel](https://www.financedigest.com/uniper-sells-uae-marine-fuels-refinery-to-consortium-including-montfort.html "Uniper sells UAE marine fuels refinery to consortium including Montfort"), said the Merchant Fleet, which fined the ship 80,000 euros ($85,800) and detained it from Nov. 2 to Dec. 27 while its faults were fixed.

The Linda I’s owner, Spastic Oceanway, is listed in the Equasis public shipping database as [care of Chanocean Management](https://www.financedigest.com/aon-benfield-launches-managed-care-services-platform-with-the-appointment-of-three-key-executives.html "Aon Benfield launches Managed Care Services platform with the appointment of three key executives"). There was no reference to either company at Chanocean’s corporate office listed in downtown [Hong Kong when a Reuters reporter visited](https://www.financedigest.com/hong-kong-finance-official-to-make-first-visit-to-britain-in-three-years.html "Hong Kong finance official to make first visit to Britain in three years") the building.

In eastern China, the Arzoyi [tanker – which UANI analysis showed was carrying Iranian oil](https://www.financedigest.com/u-s-sanctioned-oil-tanker-stuck-in-indonesia-carries-venezuelan-fuel.html "U.S.-sanctioned oil tanker stuck in Indonesia carries Venezuelan fuel") – ran aground while unloading at the Qingdao Haiye Mercuria Terminal on March 23 last year, causing a small oil spill in port waters, according to data from Lloyd’s List Intelligence.

Three days later, the Petion carrying Venezuelan crude from the country’s Jose port was involved in a collision with another tanker off the Cuban port of Cienfuegos, although the cause wasn’t clear, according to the Reuters analysis.

Most of Venezuelan’s [oil exports](https://www.financedigest.com/explainer-why-malaysia-is-considering-a-ban-on-palm-oil-exports-to-the-european-union.html "Explainer-Why Malaysia is considering a ban on palm oil exports to the European Union") are subject to U.S. sanctions.

The Arzoyi’s owner, listed as Panama-based owner Vitava Shipping, couldn’t be reached for comment, while there are no contact details listed for the Petion.

Chinese and Cuban maritime authorities didn’t immediately respond to requests for comment.

The potential perils posed by the shadow fleet were shown in 2021 when Israel said a tanker [transporting Iranian oil](https://www.financedigest.com/chevron-considering-rail-transport-for-kazakhstan-oil-ceo-says.html "Chevron considering rail transport for Kazakhstan oil, CEO says") spilled its cargo in the eastern Mediterranean, causing ecological damage to a swathe of coastline.

SHIP-TO-SHIP TRANSFERS

Around 774 tankers out of 2,296 in the overall global [crude oil](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure") fleet are 15 years old or more, according to data provider VesselsValue.

Although it is not known how many of those older vessels are part of the shadow fleet, the strict vetting [policies of oil](https://www.financedigest.com/ing-toughens-oil-and-gas-policy-to-include-trade-finance-midstream.html "ING toughens oil and gas policy to include trade finance, midstream") majors and commodity traders mean they typically use tankers aged under 15 years.

Some industry participants said ship-to-ship (STS) transfers of [oil and other fuel](https://www.financedigest.com/oil-prices-rise-as-china-eases-covid-curbs-u-s-storm-fuels-supply-worries.html "Oil prices rise as China eases COVID curbs, U.S. storm fuels supply worries") cargoes involving shadow tankers at various locations at sea, outside the oversight of port authorities, posed significant safety and environmental risks.

In 2019, two tankers caught [fire in the Black Sea region while transferring fuel](https://www.financedigest.com/big-ecb-hike-adds-fuel-to-the-banking-sector-fire.html "Big ECB hike adds fuel to the banking sector fire") at sea, leaving at least 10 crew dead, after one vessel was barred from using a port due to U.S. sanctions.

We are seeing older vessels with unknown technical [management companies performing](https://www.financedigest.com/goodbye-excel-spreadsheets-hello-performance-management-tools.html "Goodbye excel spreadsheets, hello performance management tools") STS in the middle of the Atlantic,” Trafigura’s Olivi said.

“The risk of a major pollution incident is very high.”

($1 = 0.9321 euros)

(Additional reporting by Emma Pinedo and David Latona in Madrid, Sergio Goncalves in Lisbon, Marianna Parraga in Houston, Farah Master in [Hong Kong](https://www.financedigest.com/citadel-accelerates-hiring-push-in-hong-kong-and-london.html "Citadel accelerates hiring push in Hong Kong and London"), Timothy Gardner in Washington, Parisa Hafezi in Dubai and Beijing bureau; Editing by Veronica Brown and Pravin Char)


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