Several companies that certify that ships are in a position to navigate and ship insurers have withdrawn services to oil tankers involved in the Venezuelan oil trade, as the United States targets the maritime industry to tighten sanctions in the Latin American country.
U.S. sanctions have brought Venezuela’s oil exports to their lowest levels in nearly 80 years, depriving President Nicolás Maduro’s socialist government of its main source of income and leaving the authorities cashless for essential imports such as food and medicine.
The sanctions are part of the United States’ efforts to weaken Maduro’s grip on power after Washington and other western democracies accused him of manipulating a 2018 re-election vote. Despite the country’s economic collapse, Maduro has withheld and frustrated the administration of the President of the United States, Donald Trump.
What you will see is that most shipowners and insurance and captains will simply walk away from Venezuela.
Elliott Abrams, Washington special envoy to Venezuela
Maduro’s government says the United States is trying to seize Venezuela’s oil and calls the United States illegal measures of persecution that accumulate suffering for the Venezuelan people.
Washington has focused on the maritime industry in recent months in an effort to better enforce oil trade sanctions and isolate Caracas, Washington special envoy to Venezuela Elliott Abrams told Reuters.
“What you will see is that most shipowners and insurances and captains will just walk away from Venezuela,” Abrams told Reuters news agency.
“It just isn’t worth the trouble or the risk to them.”
The United States is putting pressure on shipping companies, insurers, certifiers and flag states that register ships, he said.
Ship classification societies, which certify safety and environmental standards for ships, feel the heat for the first time.
The United States is pressing classifiers to establish whether ships have violated sanctions regulations and, if so, withdraw certification as a way to further tighten sanctions, a US official speaking on condition of anonymity told Reuters. .
Without certification, a ship and its cargo are left without insurance. Shipowners would also breach commercial contracts that require certificate maintenance. Additionally, port authorities may refuse entry or stop a ship.
Lloyd’s Register (LR), based in London, one of the world’s leading ship classifiers, said it had withdrawn services from eight oil tankers that were involved in trade with Venezuela.
“In accordance with our program to comply with sanctions laws, where we find that vessels operate in breach of relevant sanctions laws, the LR classification was withdrawn,” said a spokeswoman for Lloyd’s Register.
Crude oil tankers docked at the PDVSA terminal of the Isla oil refinery in Willemstad on the island of Curacao [File: Henry Romero/Reuters]
Abrams said the pressure on the maritime industry was working.
“We have had a number of shippers come up to us and say, ‘We just had our insurance company withdraw the insurance, and the ship is on the high seas and we have to get to the port. Could you give us a license? During a week? “said Abrams.
In June, the United States designated six shipping companies, two of them based in Greece, and six tankers they owned to participate in Venezuela’s outlawed trade.
Another leading ship classifier, Hamburg-based DNV GL Maritime, said it had suspended services for three of those ships in June.
The company resumed services when the U.S. removed those ships from the sanctioned entities list after the shipping companies that own and operate the ships agreed to cease trade with Venezuela.
Cooling effect
The United States has threatened to impose sanctions on any company involved in oil trade with Venezuela, and that has had a chilling effect even on the trade allowed under the sanctions.
The shipping sector has been on the receiving end of the US action on Venezuela and has caused a lot of uncertainty as no one knows who will be next.
Shipping industry source
Some oil companies refuse to rent ships that have called Venezuelan ports in the past year, even if the trip was exempt from sanctions.
“The shipping sector has been on the receiving end of US action on Venezuela and has caused a lot of uncertainty as no one knows who will be next,” said a shipping industry source.
Insurers are also in trouble. They have been conservative in their interpretation of United States sanctions to avoid possible violations, said Mike Salthouse, chairman of the sanctions subcommittee of the International Group association. The group represents companies that insure around 90 percent of global commercial shipping.
“If there is ambiguity as to what is legal and what is illegal, it makes it almost impossible for an insurer to say whether someone has coverage or not,” he said.
Even after ships and companies are removed from the sanctions list, they can face difficulties, Salthouse said.
“The stigma associated with a designation can last for some time,” he said.
Large oil companies, for example, can review relationships with companies that own or manage vessels that the United States has designated and then eliminated to avoid possible problems with other vessels, he said.
‘Real threat’
Venezuela is on the list of high-risk areas established by London insurance market officials.
Cars are parked in line near a service station with subsidized fuel in Caracas, Venezuela [File: Manaure Quintero/Reuters]
“If a ship sails to Venezuela, they have to notify the insurer and the subscriber may not be able to cover them,” said Neil Roberts, head of marine underwriting at Lloyd’s Market Association, which represents the interests of all underwriting businesses. at Lloyd’s London Market.
The industry faces “the direct and real threat that a vigilant administration in the United States will stop its trade due to an unintentional violation,” he said.
“This risk alone is enough to fuel the multiplication of compliance checks.”
Some of the world’s largest flag registries, including Panama and Liberia, are also taking a closer look at ships that participated in Venezuela’s trade as they are under pressure from the United States to withdraw the registration of ships they violate. the sanctions.
Maritime attorneys in Panama said their registration is fining ships that do not comply with the United States’ maritime guidance issued in May. The registry is mostly defragmentation vessels to which multilateral sanctions are applied rather than unilateral sanctions from the United States, the lawyers said.
There are people who do not cooperate … We will go after the ship, the owner, the ship’s captain.
Elliott Abrams, Washington special envoy to Venezuela
Liberia registry officials did not respond to requests for comment.
United States Secretary of Commerce Wilbur Ross, a former shipping investor, helped design the strategy targeting the maritime sector, the sources said.
A Commerce Department spokesman acknowledged that Ross had worked with other government agencies “to determine how to better hold those who evade US sanctions” accountable against Venezuela.
Abrams promised to keep the pressure on.
“There are people who don’t cooperate … We will go after the ship, the owner, the ship’s captain.”
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