Will it take a ‘Prestige’ moment to tackle the dark fleet threat?
The imposition of sanctions has inadvertently created the conditions that have allowed a dark fleet to flourish and undermined the rules-based order upon which shipping relies in the process
The dark fleet poses a threat to shipping safety, but it may take a big, messy and very public European disaster to get that threat on to the political radar
SHIPPING has generally waited for a big, messy disaster before it acts to improve a known problem.
Progress is born out of expensive disasters, death and pictures of oily birds.
The fallout from the Erika (1999) and the Prestige (2002) casualties in Europe spawned a generational regulatory crackdown that continues to reverberate through the industry today.
It may take something similar to tackle the threat posed by the *dark fleet.
Russia’s circumvention of Western sanctions via a growing vintage fleet of ships is an ecological and financial time bomb.
These ships are operating with inadequate or no P&I insurance while transporting vast volumes of crude oil on high-traffic routes through narrow straits close to shorelines, with their Automatic Identification System turned off to conceal their location.
The cost to coastal states of cleaning up after a dark fleet tanker oil spill in southeast Asia could hit $1.6bn, Finland’s Centre for Research on Energy and Clean Air said on Friday.
If that scenario played out across a European coastline, the cost would be a minor concern compared with the political fallout that would inevitably ensue.
Counterproductive sanctions
The G7 price cap policy, introduced more than a year ago in an attempt to keep Russian crude on the international market, while undermining the Kremlin’s ability to finance its war in Ukraine, is a flawed regime.
But the biggest flaw is not the over-reliance on self-declared ‘attestation’ documents, or the fact that the rules are being routinely circumvented via an international game of regulatory whack-a-mole. No; the biggest issue is that everyone knows these sanctions have fundamentally undermined the rules-based order upon which trade relies.
Sanctions have weakened safety standards, leaving hundreds of vessels operating outside of the mainstream standards and institutions that had collectively improved reduced casualties year on year for decades.
They have created an expensive, convoluted series of obstacles for the shipping industry to navigate its way around.
When a dark fleet Prestige rustbucket fills the English Channel, it will not be possible for any government to claim they didn’t see this coming.
A billion dollar claim, or even two billion, would certainly have an impact in Asia. Clean-up costs would come out of state budgets and cause political problems higher up. When the ‘insurance’ is revealed to be worthless, it would cause embarrassment certainly, but would it stem the flow of Russian oil?
A European spill on the scale and visibility of Prestige would demand a change.
When the 26-year-old, structurally deficient aframax Prestige, burst a tank on November 13, 2002, the French, Spanish and Portuguese governments all refused to allow the ship to dock. When the 77,000 tonnes of heavy fuel oil it was carrying ended up smeared across the Galician coastline, it prompted a decade of political discussions as to the credibility of those decisions.
A dark fleet Prestige would demand action.
Hothousing a parallel fleet
Pockets of dangerous, substandard shipping have always existed. But the sanctions regime, as we have it, has inadvertently created the conditions that allow an operating model with even lower costs, minimal scrutiny and illusory insurance cover to take hold.
That is dangerous and needs proper political attention.
The fact that the dark fleet poses a significant risk to lives and the environment has been well understood for some time now. Insurance giant Allianz pointed out in May that shadow fleet tankers were linked to more than 50 accidents. Its authors fully expect next year’s tally to be significantly higher. The chances that one or more of them will be significant are not nugatory.
The boxship that brought down the Francis Scott Key bridge in Baltimore has caused a significant political backlash in the US. But at least it was fully insured. The dark fleet tanker that spills two million barrels of Russian crude in the Channel probably won’t be.
* Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined in US State Department guidance issued in May 2020. The figures exclude tankers tracked to government-controlled shipping entities such as Russia’s Sovcomflot, or Iran’s National Iranian Tanker Co, and those already sanctioned.
Download our explainer on the different risk profiles of the dark fleet here