Bohai spill shipowner says it follows sanctions

Greek shipowner NGM told Argus today it has no knowledge if crude that spilled from one of its vessels off China's coast this week originated in Venezuela, a longtime target of US sanctions.

"The cargo onboard the A Symphony was loaded in Asia," the company said. "NGM Energy's strict compliance policy continues to be that the vessels it manages do not carry Venezuelan cargo absent authorization from US sanctions authorities. NGM screens all shipment details and documentation for sanctions compliance. NGM has not knowingly loaded any unauthorized cargoes of Venezuelan origin, either in Venezuela or abroad."

Chinese authorities are working to clean up around 400t (3,000 bl) of oil that spilled from the 20-year-old Suezmax tanker following a collision with another vessel earlier this week.

The Liberia-flagged tanker collided with the Panamanian flagged bulk vessel Sea Justice on 27 April, causing an oil spill in the Bohai sea near Qingdao port in Shandong province.

Shandong's maritime safety administration (MSA) said it has dispatched 12 vessels to help clean up the oil and the emergency response work is proceeding smoothly.

The incident happened around 40 nautical miles (75km) from Qingdao. Vessel arrivals and departures are continuing as normal at Qingdao, the MSA said.

Malaysia loading

Vortexa data indicate the A Symphony loaded its cargo in Malaysia in early April, but it is not clear where the crude originated. The A Symphony was due to discharge around 1mn bl of crude in Qingdao on 27 April, according to data from Vortexa. Details of the charterer are unavailable.

The cargo was booked by a local trading firm and destined for an independent refiner in Shandong province, market participants said. The cargo was classified as bitumen blend.

Despite US sanctions meant to keep Venezuelan oil out of the market, supplies of bitumen-rich 16°API Merey blend routinely make their way to China through obscure intermediaries, often undergoing ship-to-ship operations in southeast Asia.

The oil sanctions, which Washington first imposed in January 2019 in an effort to force President Nicolas Maduro from power, have no direct secondary component, but the US has actively discouraged Venezuelan oil trade by sanctioning tankers and shipping companies that are caught moving Venezuelan oil.

In June 2020, NGM said that it had implemented a strict policy against tankers calling at Venezuela, or loading Venezuelan-origin cargoes, unless expressly authorized by the US. The statement came after the US Treasury Department's Office of Foreign Assets Control (Ofac) added NGM's MT Voyager I to the sanctions list.

At the time, NGM said it would fully co-operate with the US to ensure that it was compliant with all applicable sanction rules and policies, and diverted the very large crude carrier (VLCC) Commodore away from Venezuela. The MT Voyager I was later cleared of the sanctions designation.

China imported 4.44mn t of bitumen blend (325,000 b/d) from Malaysia in January-March, up by 26pc from a year earlier and accounting for 83pc of its total imports of the product during the period, customs data show. About 67pc of this year's imports flowed to Shandong, the heartland of China's independent refining sector.

Insurance question

If the vessel had been carrying sanctioned crude, it would be difficult for the parties to access insurance payments for the incident, a maritime lawyer told Argus. Cargo and hull and machinery claims may be rejected if the vessel insurance policy contains a clause prohibiting it from carrying sanctioned crude, the lawyer said.

The MSA has not said what kind of oil the vessel was carrying. Heavier grades would be harder to clean up than lighter types of oil, potentially worsening the environmental impact of the accident. The smell of the leaked oil has already reached Qingdao's Huangdao region, a local resident told Argus.