Growing armada shipping sanctioned oil burns dirty fuel in a setback for clean-up efforts By Reuters

Written by Jonathan Saul

LONDON (Reuters) – The growing shadow fleet of tankers transporting sanctioned Iranian, Venezuelan and Russian oil is filling up with the cheapest fuel available, hampering industry efforts to use cleaner fuels to cut shipping emissions, according to shipping data and sources.

The global shipping industry is under increasing pressure to use cleaner fuels to reduce carbon emissions, sulfur dioxide and other pollutants and meet broader green goals.

The hundreds of tankers transporting sanctioned oil are a challenge because they are difficult to trace due to their murky ownership, use of non-Western insurance and other maritime services, and little incentive to follow clean shipping standards.

“We are seeing greater numbers of ships finding ways to circumvent sanctions by operating outside Western jurisdiction,” said Michelle Weis-Bockman, principal analyst at maritime data group Lloyd's List Intelligence.

“The Dark Fleet has used steroids. The deceptive shipping practices they engage in are becoming more sophisticated and sophisticated.”

These include dangerous ship-to-ship transfers of oil in international waters to avoid port state control scrutiny, falsifying ship identification numbers, sending tankers false information about their location, and using flag registries with lower standards of oversight and technical expertise, Bookman said.

Lloyd's List Intelligence estimates that the shadow fleet has grown to about 630 tankers from 530 a year ago, making up 14.5% of the total global tanker fleet.

Some industry estimates put the number even higher, at more than 800 tankers.

The figures point to further rapid expansion following Moscow's invasion of Ukraine in 2022 and Western restrictions on Russian energy exports, which led to sanctions on ships.

Before the war, the shadow tanker fleet numbered about 280-300 ships, according to Lloyd's List Intelligence.

This growth has raised concerns about its environmental impact as well as the safety and effectiveness of sanctions, including a Western ban on shipping and trading Russian oil at more than $60 per barrel.

Under the so-called IMO 2020 Convention adopted by the United Nations International Maritime Organization (IMO), ships must switch to low-sulfur fuel from high-sulfur diesel that the industry has used for decades.

No “scrubbers”

Implementing these regulations designed to reduce emissions is up to IMO member states, which can impose fines or detain ships for non-compliance. In April, the International Maritime Organization called on its members to increase inspections of ships deemed shadow vessels and stiffen fines for any violations.

IMO rules state that ships can only burn high-sulphur fuel if they have exhaust gas cleaning systems, known as scrubbers.

However, shadow fleet tankers can run on high-sulfur diesel — which is estimated to cost 20% less than green fuel — without checks unless they are stopped at ports that enforce the regulations, people familiar with the matter said.

“A lot of shadow ships don’t have scrubbers, but they buy high-sulphur fuel oil when they’re in Russia,” an industry source said. “Therefore, they are in violation of the sulfur limit set by the IMO.”

It is difficult to measure the extent of non-compliance with IMO 2020 requirements across the shadow fleet, but there has been a rise in cases of vessels detained for sulfur-related violations.

Port authorities in Europe and Asia detained at least 10 ships in the first five months of 2024 in connection with the agreement, up from six ships in the same period last year and five for all of 2022, according to a Reuters analysis based on data from the port. Enforcement authorities. Of the ten detained carriers, nine had previously made calls to Russia.

Russian and Iranian fuel supplies

Russia and its partners in the Eurasian Economic Union, which includes Kazakhstan, Kyrgyzstan, Armenia and Belarus, agreed in December to continue using high-sulfur fuel until the end of 2026.

That means ships can still get high-sulfur fuel from ports serving those countries, say people involved in the fuel shipping trade.

Sources say Iran, another producer of high-sulfur fuel, supplies ships in the Gulf region of the Middle East.

In one such operation, the tanker Casanova loaded this fuel at the Iranian port of Bandar Imam Khomeini in recent months, said Claire Jungman, chief of staff of the US advocacy group United Against Nuclear Iran, which tracks the movement of tankers linked to Iran via satellite data. . Cazenova later transferred some of the fuel to smaller ships waiting around the Basra anchorage in southern Iraq, Jungmann said.

The ship's owner in Liberia, Le Monde Marine Services, could not be reached for comment.

Casanova's ship insurer, West P&I, said it was canceling coverage for the vessel after Reuters requested comment.

A spokesman for the US-based company said ship-certified ABS, which provided security cover for Casinova, was investigating its activity.

“ABS takes every allegation and issue of sanctions very seriously,” the spokesperson said. He added: “We are committed to complying with the US and UN sanctions regimes and all other applicable laws.”