Home / World / Exclusive: The United States is turning screws on the maritime industry to cut Venezuela’s oil

Exclusive: The United States is turning screws on the maritime industry to cut Venezuela’s oil



LONDON / WASHINGTON (Reuters) – Several companies that certify vessels are seaworthy and ship insurance companies have recalled services to tankers involved in the Venezuelan oil trade as the United States targets the shipping industry to tighten sanctions on the Latin American country.

FILE PHOTO: An oil tanker is seen in the sea outside the Puerto La Cruz oil refinery in Puerto La Cruz, Venezuela July 19, 2018. Image taken July 19, 2018. REUTERS / Alexandra Ulmer / File Photo

US sanctions have pushed Venezuela’s oil exports to their lowest levels in almost 80 years, starved President Nicolas Maduro’s socialist government of its main source of income and left the government with a lack of cash for important imports such as food and medicine.

The sanctions are part of US efforts to weaken Maduro’s hold on power after Washington and other Western democracies accused him of voting for reelection 2018. Despite the country’s economic collapse, Maduro has kept frustrating the administration of the US President Donald Trump.

The Maduro government says that the United States is trying to seize Venezuela’s oil and calls the United States action for illegal persecution suffered by the suffering of the Venezuelan people.

Washington has quit the maritime industry in recent months to better implement sanctions on the oil trade and isolate Caracas, Washington’s special envoy on Venezuela’s Elliott Abrams told Reuters.

“What you see is most shipowners and insurance and captains will simply turn away from Venezuela,” Abrams told Reuters in an interview.

“It’s just not worth the trouble or risk to them.”

The United States is pushing shipping companies, insurance companies, certifiers and flag states to register ships, he said.

Vessel classification societies, which certify safety and environmental standards for vessels, feel the heat for the first time.

The United States is pushing classifiers to determine if vessels have violated the sanctions regulations and withdrawing the certification if that is a way to further tighten the sanctions, a US official told Reuters and spoke of anonymity.

Without certification, a ship and its cargo will be uninsured. The shipowners would also breach commercial contracts requiring the maintenance of certificates. In addition, the port authorities may refuse entry or imprisonment of a vessel.

London headquarters Lloyd’s Register (LR), one of the world’s leading ship classifiers, said it had withdrawn services from eight tankers involved in trade with Venezuela.

“In accordance with our Sanctions Compliance Program, where we become aware of vessels that violate relevant sanctions laws, LR classification has been withdrawn,” a spokeswoman for Lloyd’s Register said.

Abrams said the pressure on the maritime industry worked.

“We’ve had a number of senders come to us and say, ‘We just had our insurance company take back the insurance, and the ship is at sea and we have to get to port. Can you give us a license for a week?'” He said. Abrams.

In June, the United States named six shipping companies – two of them based in Greece – and six tankers they owned to participate in printed Venezuelan trade.

Another leading vessel classifier, Hamburg headquarters DNV GL Maritime, said it had suspended services for three of these vessels in June.

The company resumed services when the United States removed these ships from the list of sanctioned entities after the shipping companies that own and operate the vessels agreed to cease trading with Venezuela.

cooling Effect

The United States has threatened sanctions against all companies involved in the oil trade with Venezuela, and it has had a cooling effect even on trade allowed under sanctions.

Some oil companies refuse to charter ships that have arrived in Venezuela’s ports in the past year, even though the trip was exempt from sanctions.

“The shipping sector has been at the end of US efforts against Venezuela and it has caused a lot of uncertainty because no one knows who will be next,” said a shipping company.

Insurance companies are also in a bind. They have been conservative in their interpretation of US sanctions to avoid any violations, said Mike Salthouse, chairman of the Sanctions Subcommittee with the International Group. The group represents companies that insure about 90% of the world’s commercial shipping.

“If it is unclear what is legal and what is illegal makes it almost impossible for an insurer to say whether someone has protection or not,” he said.

Even after vessels and companies have been removed from the list of sanctions, they can face difficulties, Salthouse said.

“The stigma associated with a designation may take some time,” he said.

For example, oil programs may review relationships with companies that own or manage vessels designated by the United States and then removed to avoid any problems with other vessels, he said.

“REAL THREAD”

Venezuela is on the list of high-risk areas determined by officials from the London insurance market.

“If a ship sails to Venezuela, they must notify the insurer and the insurer may not be able to cover them,” said Neil Roberts, head of marine underwriting at Lloyd’s Market Association, which represents the interest of all insurance companies in London’s Lloyds market.

The industry faces “the direct and real threat of having its trade stopped by a watchful US administration because of an unintentional intrusion,” he said.

“This risk alone is sufficient to drive the multiplicity of compliance checks.”

Some of the largest global flag registers, including Panama and Liberia, are also looking closely at vessels involved in Venezuela’s trade as they come under US pressure to withdraw registration for vessels violating sanctions.

Maritime lawyers in Panama said its registry fines vessels that do not follow the U.S. Maritime Guidance issued in May. The registry mostly settles vessels targeted by multilateral sanctions rather than unilateral US sanctions, the lawyers say.

Officials at the Liberia Register did not respond to the request for comment.

US Secretary of Commerce Wilbur Ross, a former maritime investor, helped shape the strategy for the maritime sector, sources said.

FILE PHOTO: Crude oil tankers docked at Isla Oil Refinery PDVSA terminal in Willemstad on the island of Curacao, February 22, 2019. REUTERS / Henry Romero / File Photo

A Department of Commerce spokesman acknowledged that Ross had cooperated with other authorities “to determine how best to be held accountable for those who avoid US sanctions” against Venezuela.

Abrams promised to keep the pressure up.

“There are people who do not cooperate … We must follow the ship, the shipowner, the ship captain.”

Additional reporting by Marianna Parraga of Mexico City and Elida Moreno of Panama City; Editing by Simon Webb and Daniel Wallis

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