Oil spill Russian Roulette on the high seas

Charles Cormack , Intelligence Analyst at SynMax, analyses the growing problem of dark ship-to ship transfers caused by the sanctions imposed on the export of Russian oil

Changing World

It cannot be said that Russia’s decision to invade Ukraine in early 2022 has gone entirely to plan, severely affecting Russia, its interests on the battlefield and its position within the international community.

While the West and NATO cannot be seen to be involved militarily, the US and the European Union have imposed biting sanctions upon Russia in an attempt to reduce its economic ability to wage war.

Included is a maximum price cap, imposed by the G7, of $60 per barrel on oil, by far Russia’s most lucrative export, and a ban on seaborne crude and refined products entering the EU.

However, because of Russia’s willingness to embrace clandestine networks and non-legal avenues, it cannot yet be claimed that sanctions have entirely guaranteed that either the price cap is adhered to or total oil exports reduced.

Using dark vessels to transport energy products was, until recently, a fringe activity carried out by Iran and Venezuela to avoid Western sanctions.

Since the invasion, however, Russia has incentivised and aided the emergence of a massive fleet of obscurely owned, dubiously insured and creatively registered dark oil tankers.

By subverting international shipping regulations and procedures, Russia has returned its oil export capacity to pre-invasion levels. In March 2023, Russia’s oil exports were the highest since April 2020.

Tricks Of The Trade

In March 2023, it was estimated that there were 440 dark tankers above 30,000 dwt tonnes globally, an increase of 180 in the past year, accounting for 10% of all large tankers.

Two of the most commonly employed tricks of the dark shipper’s trade are automatic identification system (AIS) spoofing and ship-to-ship (STS) transfers.

Created to aid collision avoidance, AIS is a requirement by the International Maritime Organization (IMO) for commercial vessels of more than 30 meters.

It regularly transmits navigational data, including a vessel’s identity, position, course, speed and destination, and as a by-product gives interested parties an oversight of light vessel’s movements and behaviours.

Spoofing works in a similar fashion to masking an internet connection by using a VPN, synthetically projecting a vessel’s location to create a digital alibi and allow a semblance of plausible deniability.

Theia, SynMax’s ground-breaking maritime domain intelligence product, is the only at-scale solution to AIS spoofing. Theia combines the evidential proof of satellite imagery with the scalability of machine learning and artificial intelligence, allowing for automatic identification, attribution and analysis of any vessel of more than 30 meters, light or dark, spoofing or not spoofing (see Image 1).

SHIP-TO-SHIP TRANSFERS

That a vessel engages in STS transfers is not deceptive behaviour. STS transfers can be a legitimate way of moving oil, cargo, fuel, supplies or personnel between vessels without entering a port setting. In doing so, they can avoid fees, bureaucracy and the size limitations imposed by port infrastructure.

However, the benefits of STS transfers are not limited to legal activities alone.; increasingly, they are used to obfuscate the origins of sanctioned oil. Particularly useful if, for example, you wanted to sell Russian oil in the EU or for more than $60 a barrel.

To ensure minimal risk of cargo spillage or damage to vessels, innocent transfers overwhelmingly take place in sheltered, territorial waters.

The International Convention for the Prevention of Pollution from Ships (MARPOL) requires vessels engaging in STS transfers within territorial waters to notify coastal authorities 48 hours in advance. Thus, if an accident were to take place, help could be immediately at hand and environmental damage minimized.

Dark vessels collect oil from pariah states, including Iran, Venezuela and Russia, and carry out STS transfers in international waters, hidden from the watchful eye of regulators and port state control (PSC). The IMO referred to the tactic as: “Dangerous practice of ship-to-ship transfers in the open ocean.”

PSC inspections are required by foreign ships arriving in national ports. An essential part of the rules-based international maritime status quo, they act as an audit point, verifying that both vessel and cargo comply with IMO regulations, including MARPOL and safety of life at sea (SOLAS).

Using STS transfers to carry out the bulk of logistical operations has meant below-standard, dark mercenary vessels can carry out a lucrative trade running sanctioned oil without the risk of detention, confiscation, or accountability by states or regulators.

Theia’s high-resolution imagery ensures that dark vessels engaged in STS transfers on the open ocean are identified automatically and prosecuted if they are found to be lacking the necessary care and precautions. By taking into account changes to a vessel’s draught, oil can be effectively tracked from producer to consumer, making dark STS transfers obsolete.

Panama

MARPOL legislation dictates that vessels conducting STS transfers in international waters must notify the flag state with which they are registered. Endemic usage of flags of convenience has meant almost all dark ships are registered with small, undemanding states without the capacity to police vessels sailing under their flag, or that are willing to turn a blind eye to non-legal behaviour.

In November 2022, a leading maritime intelligence provider analyzed 43 large oil tankers anchored off the coast of Malaysia. All were aged 20 years or older and were being used as floating storage tanks - oil halfway houses - used to obscure the link between production in Iran, Venezuela, or Russia and consumers in China.

Of the 43 observed, 24 were flagged in Panama. This is not surprising as an estimated 45% of the dark fleet chooses to register in Panama, thanks to its laissez-faire attitude to policing and legislation enforcement on nationally flagged vessels.

Imo

In March 2023, Australia, Canada, and the US presented a joint submission to the IMO, raising concerns about the growing number of dark ships carrying out STS transfers in the open ocean.

They argued that the changing status quo could be perceived as a move away from the rules-based international order, represented an increased risk of pollution to coastal states and highlighted a lack of liability and compensation legislation in the event of an oil spillage.

The submission stated: “These risky practices unjustly expose national and local governments and authorities to potentially fill the void of paying for response and clean-up costs and compensating victims where no international or domestic compensation fund can do so.”

They called for flag states to take more responsibility in ensuring their tankers adhere to IMO conventions and to demand notification of STS transfers in open waters.

The IMO held its 110th session on open ocean STS transfers and dark shipping tactics at the end of March 2023, and announced that it: “Broadly supported the recommended measures outlined in the original submission.”

They clarified that STS transfers on the high seas were: “High-risk activities that undermined the international regime with respect to maritime safety, environmental protection and liability and compensation needed to be urgently addressed.”

The IMO Assembly has since announced plans to meet in November 2023 to draft a resolution to go on the offensive against dark shipping and dangerous open-ocean STS transfers.

Theia is the complete tool for regulators, providing actionable intelligence to guarantee legislation is more than an empty threat. By bringing oversight and transparency to millions of square kilometers of open ocean, Theia ensures there is nowhere for bad actors and dark vessels to hide. Theia tracks the entire journey of a vessel and its cargo, making STS transfers, AIS spoofing and other obfuscation tactics used by dark ships obsolete.

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Friday 13 October 2023