DYNAMARINe CEO, Dr. Alexandros Glykas, warns how new regional ship-to-ship operators are impacting established global suppliers
Joining two vessels at sea in a ship-to-ship (STS) operation need not be high risk, if established guidelines and procedures are followed and the correct equipment is used for the location and conditions.
Dr. Alexandros Glykas, CEO of STS service provider audit firm DYNAMARINe, says that unlike other operations that involve significant third party risks, the STS business model has a unique feature: charterers and cargo owners bear the costs and select the STS provider. while the tanker operators run the operation and assume responsibility for safety (despite having limited or no control over the selection of third party service providers).
In addition, STS service providers are not regulated by international law; their performance and standards are evaluated primarily by the users, usually the captain of the daughter ship, during an STS operation. If a ship’s captain raises concerns about the service provider, the service provider has the option of responding with counterarguments based on industry standards or using the comments as an opportunity for improvement. For this reason, it is essential to have a safety management system (SMS) verified by an independent organization, says Dr. Glykas.
DYNAMARINe’s analysis of STS data shows that global STS service providers saw their share of operations decrease from 2020 to 2022, while local providers saw their share increase.
DYNAMRINe says that over the past two years local and regional STS suppliers have benefited from sanctions and unfair competition from local suppliers offering poor practices.
It’s a cascading effect: when an oil major pulls out of a location due to reputational risks, smaller traders come in and contract with local or regional STS service providers. DYNAMARINe says global service providers have pulled out of traditional markets, such as Malta, Denmark, Ceuta, Limassol, West Africa and Tanjung Pelepas. He says those global players have been replaced by smaller organizations “with an obvious lack of security standards, evidenced by their unverified management systems or past performance evaluations.”
Reputational risks and sanctions prevent oil majors and global STS service providers from entering the high-risk environment of the so-called “Dark Fleet,” which serves the movement of sanctioned crude oil and petroleum products. Says Dr. Glykas: “With more local suppliers with unverified or non-existent SMS, hired by traders with a quick interest in cargo transfer, the safety of STS operations depends solely on the master and tanker operator’s procedures. But is this enough? Are all tanker operators equally prudent in STS matters?”
IMO and EU to clamp down on STS
The rise of the Dark Fleet and its use of STS, and the resulting potential for environmental damage, was noted at the last MEPC meeting in July 2023. MEPC 80 proposed an Assembly resolution to raise awareness of potential environmental risks. . The document proposed a draft Assembly resolution to encourage action, including increased monitoring of such operations.
The legal implications of the Dark Fleet and STS were also discussed at the IMO Legal Committee, 110th Session (LEG 110) in March 2023.
LEG 110 urged flag States to implement measures that would prohibit or legally regulate STS transfers while maintaining the spirit of the safety requirements of the IMO conventions. It also requested flag States to consider requiring vessels to update their STS operations manuals, including notification to the flag State during high seas operations.
In addition, port states were urged to enforce the safety and liability conventions and ensure that STS transfer operations comply with the applicable safety requirements in the IMO conventions. In the event that vessels “shut down,” port states were encouraged to conduct enhanced inspections and notify the respective vessel’s flag administration.
Draft resolution MEPC 80 and resolution LEG 110 will advance to the next plenary session of the IMO Assembly (November 27 to December 6, 2023), led by the Spanish delegation.
It was Spain that was instrumental in adding STS to the eleventh round of EU sanctions, announced in June 2023. This included a port ban on tankers making STS oil transfers, or “shutting down”.
Citing a “sharp increase in deceptive practices by vessels carrying crude oil and petroleum products”, the Council has decided to ban access to EU ports and locks for any vessel involved in STS transfers, if the authorities have reasonable grounds to suspect that the vessel is in breach of the ban on importing Russian crude oil and petroleum products by sea into the EU, or is carrying these products purchased above the maximum price agreed by the EU.
The EU ban will also apply when authorities suspect vessels of turning off or otherwise disabling their navigation systems when carrying Russian crude oil and petroleum products.