Chris Morgan is global head of credit and compliance at Shipergy. Image Credit: Shipergy

Us credit and compliance professionals have been warning for a couple of years that, although we haven’t had a bunker company added to the sanctions list yet, the past does not guarantee the future, and that at some point the sanctions searchlight was going to shine on bunker companies.

Some bunker traders will be blinking into its harsh, uncompromising glare this morning with more confidence than others.

Historically, the EU has specifically excluded bunkering sanctioned ships or ships with sanctioned cargo on board as being designated as facilitating sanctioned trades, but that seems to have changed as of the announcement of the EU's Package 21.

It is the 'shadow fleet' they are targeting, and the grey area over what that nebulous classification means in practicality is the sticky point for bunker traders.

What does it mean? What does the EU think it means? How can you tell?

It is now no longer enough to check the IMO number of the vessel you are supplying to ensure it isn't on any of the sanctions lists. 'Dark fleet' for us now means any vessel moving sanctioned cargo, or having historically done so, even if she or her owners, managers etc aren't sanctioned.

Even if your customer is legitimate, the ports aren't sanctioned, the cargo is clear and so on, you can still be supplying a 'dark fleet' vessel because of what she was doing previously that may not even be flagged or obvious. Some shipping companies are going to incredible lengths to hide what they are doing, not just from you but from the authorities. How do we manage that?

You ensure your firebreak periods mirror those of your banks, and you ensure your checking is robust throughout that period. It isn't enough to just see if the vessel is coming up red or amber in LLI or whatever.

You need to look at the trading patterns and pick out the STS, loitering and so on and make an informed judgement on whether the vessel is engaged in moving sanctioned cargo or not.

You need to be asking for BL copies. You need to document all the information you use to make your determination and have it as a paper trail ready in case of any questions from your banks, financiers and so on.

If you cannot show you took all reasonable measures according to your internal policy to make the decisions you did, then you cannot count on any leniency from what comes next. Ensuring your policy and procedures cover you now and for the foreseeable in this fast-changing landscape, and ensuring everyone sticks to them, is key. 

Pragmatically, if you cannot prove and document it is safe, then don’t do the deal.

Of course commercial pressures in this crazily over-supplied market mean that blithely turning away anything that looks even remotely dodgy is a difficult pill to swallow, not least because these trades very often get fixed by bigger trading houses in many cases, which can lead to some resentment from your trader.

We’ve all heard it. How is it that we cannot go near this one, but [<insert large international trading house here>] can do it?

The bigger houses are at an advantage because they have dedicated sanctions compliance people and the time and resources to manage getting the information needed to clear the deal, plus the commercial power to get these documents from customers when they ask.

Many shipping companies out there have been asking for many years why we ask for certain documents and others do not. Naturally, they will just fix with whoever asks them the fewest questions. And so more resentment from the trader. Why are we making it so difficult?

Everyone understands the need to stay safe in these times, but turning away trades on an often quite subjective basis is never easy and it is fair to say that one of the main skills any compliance manager should have in bunkering is diplomacy.

Shipergy has always taken sanctions compliance very seriously, and probably fairly conservatively relative to many of our peers. But that has stood us in good stead over the years and will continue to do so following the EU’s announcement.

We aren't going to materially change our internal policy as it covers us, as of now. But one suspects there will be some trading houses out there having a bit of a rethink of their compliance policy now, and whatever you think of the war or its protagonists, this is a good thing for all of us.

Stay safe out there.