Insight: Venezuela exports oil, despite US sanctions, using false documents, ships linked to Iran

Core Laboratories

30/11/2022 11:09

By Marianna Parraga and Jonathan Saul
       HOUSTON/LONDON, Nov 30 (Reuters) - When the supertanker
Young Yong sailed to the Chinese port of Qingdao in September
last year, it had quality certificates for its cargo stating it
was transporting Malaysian crude oil, according to the documents
reviewed by Reuters.
    But satellite images and photos show the Chinese-owned ship
had loaded the oil four months earlier in Venezuela, an OPEC
nation in South America under U.S. oil sanctions.
    The Young Yong is one of three vessels identified by Reuters
that were chartered by little-known companies to export
Venezuelan oil and used false documents to conceal its origin,
according to shipping documents and 11 sources with knowledge of
the trade.
    Two of those tankers, including the Young Yong, were
designated this month by U.S. authorities for violating
sanctions on Iran, one of Venezuela's closest allies.
    Six shipping and oil trading specialists told Reuters the
use of false documents to conceal cargoes originating in
sanctioned countries including Venezuela and Iran has increased
compliance risks for oil and trading companies, amid a
proliferation of international sanctions.
    "It's now becoming clear you cannot trust certificates of
origin even when they come with official government
documentation," said Cari Stinebower, a U.S.-based partner with
law firm Winston & Strawn, who advises oil and trading companies
how to comply with sanctions.
    The Young Yong was one of several tankers named by the U.S.
Treasury on Nov. 3 as part of a "smuggling network" that has
used forged documentation to ship Iranian oil to finance Iran's
Revolutionary Guards and Hezbollah. The Treasury designated the
tanker as a frozen asset and placed its owner, Marshall
Islands-registered Technology Bright, under sanctions.
    The U.S. Treasury declined to comment on the involvement of
the Young Yong or the other vessels identified by Reuters in
shipping Venezuela crude.
    Stinebower, who previously worked as a legal counsel for the
U.S. Treasury's sanctions enforcement arm OFAC, said the use of
false documents to conceal the origin of cargoes was pioneered
by Iran to avoid U.S. sanctions. Citing cases she has worked on
as a commercial lawyer, Stinebower said it appeared the
technique was now being adopted to transport Venezuelan oil but
she declined to provide further details.
    Venezuela's oil ministry and state-owned oil company PDVSA
did not respond to requests for comment. Iran's mission to the
United Nations in New York also did not respond to Reuters
questions.
    PDVSA documents reviewed by Reuters said a vessel named the
Comuna loaded 1.98 million barrels of oil in the Venezuelan port
of Jose from May 11 to 21 last year. 
    However, independent monitoring company TankerTrackers.com,
which specializes in analyzing vessel movements for insurance
and shipowners' research, used satellite images and photos to
identify the tanker as the Young Yong.
    The images show the vessel's name had been painted over but
the tanker is identifiable because of the distinctive white
arches flanking its bridge, the position of the cranes on its
deck and the shape of its funnel, said Samir Madani,
TankerTrackers.com's owner.
    When the Young Yong set sail from Venezuela after loading
the oil, its location transmitter showed it departing from the
West African port of Lome.
    The Young Yong then stopped near Malaysia between early July
and August 2021. While there, on July 8, it obtained a quality
certificate from Singapore-based laboratory Saybolt that
identified its cargo as Malaysian heavy crude – which has
similar characteristics to Venezuela's Merey 16 crude grade. The
certificate measures aspects of oil - such as its density and
its levels of sulfur and metals - that allow a buyer to be sure
a cargo is within a contract's specifications.
    Saybolt's U.S. owner, Core Laboratories N.V.  CLB.N , said
in a statement to Reuters that it had certified the crude as
Malaysian heavy oil blend based on documentation it received
from the client and its analysis of the quality of the oil. The
company said it had no reason to doubt this was the case. It did
not identify who the client was.
    The quality certificate was shared with Reuters by advocacy
group United Against Nuclear Iran (UANI), which tracks shipments
potentially violating sanctions.
    Shipping database Equasis listed contact details for the
Young Yong's owner Technology Bright as care of Hong Kong-based
East Wind Ship Management. A Reuters reporter could not find
East Wind Ship Management at the address listed in the database
nor find a contact elsewhere to seek comment. Reuters was unable
to identify the buyer of the oil in China.
    Indonesian authorities said in early November that the Young
Yong had run aground off the Riau Islands on Oct. 26. UANI said
it was carrying Venezuelan fuel oil when it ran aground and was
likely trying to reach Nipah, a popular ship-to-ship transfer
hub near Indonesian waters, according to satellite pictures and
vessel tracking, analyzed by the advocacy group.
    UNSUCCESSFUL SANCTIONS
    Christian M. Ingerslev, chief executive of Maersk Tankers,
said the proliferation of sanctions had led to "separate fleets
and separate markets run in parallel": some vessels were
operating off-the-radar to service sanctioned countries,
sometimes without proper insurance, he said.
    London-headquartered ship broker Braemar PLC  BRMS.L 
estimated that the total fleet servicing Iran and Venezuela,
despite U.S. sanctions, consists of more than two hundred
tankers, including some 82 supertankers like the Young Yong that
can carry up to two million barrels of oil each.
    The United States imposed oil trading sanctions on Venezuela
in 2019 after calling Maduro's re-election the previous year a
sham. Washington has maintained pressure on the socialist leader
to hold fair elections and release political prisoners: it said
last week it could relax sanctions if there is progress in talks
between Maduro's government and the opposition.
    The use of a wide array of tactics - including false
documentation, fake vessel names and ship-to-ship transfers of
cargoes at sea - has enabled Venezuela to export more than 360
million barrels of crude and fuel since the imposition of U.S.
sanctions, according to Reuters calculations based on PDVSA's
internal documents and ship tracking data.
    That represents more than two-thirds of Venezuela's total
oil exports from 2019 through October 2022. The remainder went
either directly to its ally Cuba or to other destinations in the
Caribbean and Europe under exemptions to U.S. sanctions,
according to the Reuters calculations.
    PDVSA did not respond to a request for comment on those
figures.
    When asked about Reuters' findings about the use of false
documentation by vessels carrying Venezuelan crude, a U.S. State
Department spokesperson said: "our Venezuela sanctions remain in
effect".
    PDVSA documents from May 2021 listed Yunshu Maritime Ltd as
the charterer of the Comuna – the name used by the Young Yong to
load Venezuela crude that month. The PDVSA shipping documents
and invoices for the cargo dated September 2021 did not provide
contact details for Yunshu Maritime. Reuters was unable to find
a website or address for the company.
    Yunshu Maritime was also the charterer for another
supertanker that loaded Venezuelan oil in May 2021 under the
name Joy, PDVSA's loading schedules showed. Using satellite
images and photos, TankerTrackers.com identified that vessel as
the Panamanian-flagged tanker Adisa, which was also blacklisted
this month by the U.S. Treasury for transporting Iranian oil.
    The Treasury said the vessel is controlled by a company
owned by Viktor Artemov, a Ukrainian national who oversees a
network of cover companies used to sell sanctioned Iranian oil
and channel the proceeds to the Revolutionary Guards and
Hezbollah.
    Artemov, who has been placed under U.S. sanctions, did not
respond to requests for comment.
    The Treasury named the Adisa's owner as Triton Navigation
Corp, which is listed on Equasis as care of Thomarose Global
Ventures. Reuters was unable to locate Nigeria-based Thomarose
Global Ventures for comment.
    The Adisa set its location signal to make it appear that it
set sail from Africa in early June 2021 with Malaysia as its
destination. The vessel made a stop in Malaysia between July and
early September and then switched its transponder off for about
a week before reappearing near Qingdao in mid-September, where
it discharged, according to ship tracking data.
    However, a bill of lading for the Adisa dated June 3, 2021
and issued by West Atlantic Port Services in Togo said the
vessel had loaded 1.89 million barrels of West African blended
heavy crude oil, according to the document reviewed by Reuters.
West Atlantic Port Services did not answer phone calls for
comment.
 (Additional reporting by Daphne Psaledakis and Matt Spetalnick
in Washington and Michelle Nichols in New York
Editing by Daniel Flynn)
 ((daniel.flynn@thomsonreuters.com; +55 11 5644 7701 ; Reuters
Messaging: daniel.flynn.thomsonreuters.com@reuters.net))