The sale of a US-sanctioned tanker, which is being dismantled in India, includes extended payment terms and measures to conceal the owner's identity, unusual clauses that indicate growing pressure on old "dark" fleet vessels amid tightening sanctions, Bloomberg reports, writes UNN.
Details
The tanker Contract II - built almost three decades ago and sanctioned in 2019 under the name Jasmine for its involvement in Iranian oil trade - ran aground in late June in Alang, a shipbreaking hub in western India that has become a hotspot for "dark" fleet vessels. More such vessels have appeared in this center in recent months, as penalties make it difficult to keep old tankers in illegal oil trade, the publication writes.
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The 8-page document for its sale contains details of a 180-day payment period, much longer than what people familiar with the ship recycling business describe as an industry standard of a few days or weeks. The buyer, identified as Shantamani Enterprise LLP in the May 20 contract, can make partial payments interest-free for almost six months.
"No seller would agree to wait for their money that long after delivery," said Andrew Wilson, head of research at BRS Shipbrokers, who reviewed parts of the contract. "It suggests the seller needs to get rid of this vessel quickly."
Bimco, a global shipping organization that creates standard contracts, stated that the buyer usually makes a down payment and then pays the remaining purchase price no later than three banking days after the decision to deliver.
Shantamani reported that "the vessel has passed all necessary customs and government requirements" and that the company operates under the jurisdiction of Indian law, according to an emailed response to a query. The deal was concluded "directly with the sellers," it added.
The US and EU have repeatedly added vessels to their sanctions lists for supporting the export of Russian, Iranian, and Venezuelan oil. A year ago, 191 tankers were under sanctions, while now their number is 886, or 78% of the "dark" fleet, according to BRS. Older sanctioned tankers that have no chance of participating in mainstream transportation now either have to compete with newer vessels in the blacklisted fleet or head to the dock, the publication indicates.
The document lists Thousand Miles Shipmanagement Corp. as the seller of the vessel - a company with a registered address in the Seychelles that is linked to other US-sanctioned entities, but it has no online presence or contact information.
Ship recycling brokers sometimes create a special company to handle the final delivery of vessels sent for recycling, but the use of shell companies to protect owners is also common for "dark" fleet tankers, the publication indicates.
According to industry sources, bank account details are also almost always included in the document. However, this information is missing from the document for Contract II, which states a payment price of 14.04 million UAE dirhams (3.82 million US dollars).
UAE dirhams are not typically used as a currency for such transactions, with US dollars being much more common, they added.
The payment terms and the use of a shell company are measures aimed at making the transaction harder to trace, while sweetening the deal enough for potential buyers to take the risk, according to Charlie Brown, a senior advisor at United Against Nuclear Iran. This is consistent with the trend of blacklisted vessel trade, said Brown, who specializes in maritime sanctions enforcement at the advocacy group.
As with most such deals, the tanker was sold at a discount relative to the market, based on the price of steel scrap in India at the time the document was drawn up. This can make sense for both the seller and the buyer, as Thousand Miles is likely looking to offload blacklisted tonnage, and the scrapyard is looking to maintain healthy profitability and stay ahead of competitors at a time when the sector is struggling with a downturn, the publication writes.
The dismantling process for Contract II began this week, according to people familiar with the industry. Dismantling usually begins about a month after the vessel runs aground to ensure fuel removal and official disposal authorization.