Maritime sanctions

Charles Cormack , Intelligence Analyst at Synmax, explains how Theia, the firm’s maritime domain awareness platform, is tackling sanctions breakers at sea

Can we put Synmax founded in 2021 by energy trader Bill Perkins and quantitative analyst Eric Anderson, has a vision to bring transparency and accountability to the energy and maritime industries by combining the objective proof afforded by satellite imagery with the scalability of machine learning and artificial intelligence (AI).

Currently in operation is the Synmax Energy product Hyperion, launched in May 2022, while Theia, a maritime domain intelligence product is due to go live in the first half of 2023.

To say that recent years have seen a redistribution in the balance of regional and global power would be an understatement.

A symptom and a driving factor is the reshuffling of oil flows between producers and consumers. States have been forced to shore up energy supplies and infrastructure in the face of market and geopolitical turbulence, with east and west using oil as an economic weapon to project power.

Unintended Consequences

Sanctions have been levied in response to political, economic and security concerns by the US and the European Union against Russia and Iran, among others, and the entities with which they do business.

An unintended consequence of sanctions is the large-scale expansion of shadow fleets of ‘grey’ (AIS switched off, some trackable signals such as radio frequencies transmitted) and ‘dark’ oil tankers (all emitted signals turned off, only trackable at scale via Theia).

Industry experts estimate the size of this shadow fleet at approximately 600 vessels, or roughly 10% of large tankers globally.

To carry out trade with pariah states such as Iran and Russia, these shadow vessels employ clandestine tactics to escape the vigilance of regulatory bodies.

By going dark and ‘spoofing’ their locations (illegally turning off and synthetically projecting their automatic identification system (AIS) locations, akin to using a VPN to mask an IP address), vessels have, until now, been able to carry out illicit oil pick-ups, transfers and drop-offs obscured by the vastness of the oceans and without overview or reprisal.

MILITARY-GRADE ANALYTICS

Theia, Synmax’s maritime domain awareness platform, however, sees through spoofing attempts by using proprietary machine learning and AI in conjunction with daily global satellite imagery and military-grade analytics.

By drawing on whole earth observation data, AIS and other signals intelligence, Theia can automatically identify and attribute any vessel over 30 meters regardless of its emission state and visually track its journey at scale.

On March 8 2023, Theia placed and tracked 22,000 vessels in the South China Sea alone, bringing unparalleled and otherwise unimaginable capacity to analysts and regulatory bodies.

In addition to live tracking, Theia can retrospectively view a vessel’s historical movements, ensuring that past infractions are exposed and can be used evidentially in a court of law.

China’s importance as an oil consumer in influencing global power dynamics cannot be overstated. Wherever oil sanctions have been imposed, and legal trade throttled back, China has swooped in to fill the gap, taking advantage of artificially low prices.

Iran is China’s third largest oil provider, after Russia and Saudi Arabia. In the three months leading up to January 2023, it is estimated that it increased its oil exports by more than 1.2 million barrels per day.

Since the imposition of the G-7 price cap on Russian oil following the invasion of Ukraine, Russian oil sells for at least $25 less than Brent crude (as of January 6 2023), with Iranian oil selling for even less.

Indeed, an economist at the Vienna Institute for International Economic Studies stated: “China benefits at least by 25% of Brent oil in terms of discount, which is enormous in the scale of 1.2 million barrels per day only for Iran’s oil.”

In doing so, China maintains an enormous economic advantage compared to countries that do abide by sanctions. However, they must pay a premium to vessels engaged in sanctions running, massively incentivising oil tankers to run the gauntlet of reprisals.

One vessel that was identified as breaking Iranian sanctions by Theia, at the request of a private client, was the BERG 1.

On August 27 2022 the vessel was observed via satellite imagery transiting north into the Persian Gulf, where she began to spoof her AIS data in an attempt to conceal her true position.

According to AIS data, the BERG 1 stayed in a 20m x 20m box at Lat: 29.3166, Lon: 49.6000 from approximately 27th August 2022, 21:45 UTC until 29th August 2022, 06:38 UTC (see Fig 1). However, an inspection of satellite imagery reveals by this to be a fabrication (see Fig 2).

The BERG 1’s true location was observed via satellite imagery at the Kharg Island Oil Terminal in Iranian waters approximately 67.5km east of its transmitted location on both August 28 at 06:23 UTC and August 29 at 06:20 UTC (see Fig 3).

On August 29, at 06:57 UTC, BERG 1 was seen transiting south from Kharg Island Oil Terminal, where it resumed transmitting its true AIS location at approximately 10:47 UTC. At 11:58 UTC the vessel’s draught increased from 11m to 20.5m, leading to the assessment that oil product had been onboarded during its time alongside Kharg Island.

On leaving Kharg Island, BERG 1 transited to the Eastern Outer Port Limits (EOPL). She remained at the

EOPL anchorage point from September 15 until October 31 2022, when she began her voyage to Qingdao Oil Port, China (see Fig 4). She arrived on November 20, where she is assessed to have offloaded product, with her draught decreasing from 20m to 16m.

Us Awareness

The US is aware of increased levels of trade in oil between Iran and China. US Secretary of State Blinken stated in March that the US is: “Committed to significantly reducing Iranian energy exports and will sanction those facilitating Iran’s petroleum and petrochemical trade.”

To that end, US Special Envoy for Iran Robert Malley reported that the US has “been in contact with Chinese authorities, and we will continue to sanction those who are involved in the import of Iranian oil.”

By identifying sanctions breaches using objective, evidential data capable of being used in a court of law with no possibility of bias or manipulation, vessel operators can be financially penalized and illicit behaviour disincentivised.

Theia is not only a new tool in the arsenal of regulatory bodies, but can also be employed by insurers and other industry bodies as part of their proper due diligence, ensuring they are not inadvertently implicated and penalized as a result of sanctions breaches.