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Clyde & Co reviews sanctions and the maritime industry from the OFAC & OFSI advisories

In contrast to earlier guidance, the OFAC Advisory now sets out in detail what it expects in terms of sanctions risk management from a myriad of industry stakeholders.

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Patrick Murphy and John Keough, partners at international law firm Clyde & Co on Wednesday (5 August) published an article analysing some details found in the recently released OFAC sanctions "Advisory" directed at the maritime industry and compares it to a similar advisory released by OFSI in the UK.

The shipping and commodities industries have found themselves at the forefront of sanctions developments in recent months.  In May 2020, the US Departments of State and Treasury (the latter of which includes OFAC) and the US Coast Guard provided a sanctions "Advisory" directed at the Maritime, Energy and Metals Sectors and Related Communities (the OFAC Advisory).  The UK's Office of Financial Sanctions Implementation produced a similar advisory on 27 July 2020 (the OFSI Advisory).  It is no coincidence that these key sanctions bodies are looking closely at the maritime sector.

OFAC has historically leveraged its reach by co-opting critical elements of the global economy into enforcing its sanctions objectives.  It has traditionally looked to the banking industry to spearhead compliance given its gateway involvement in financial transactions, requiring it to filter out transactions that might be related to sanctioned persons or jurisdictions.  Now, as the United States continues its “maximum pressure” campaign of sanctions against Iran, North Korea, Syria and Venezuela in particular, OFAC is ratcheting up its intense focus on the maritime and commodities industries to require sanctions compliance.

OFAC's growing focus on due diligence in shipping surfaced in a series of advisory notes issued to the maritime industry from 2018 onwards - in respect of North Korea (February 2018 and March 2019), Iran (September 2019) and Syria (November 2018 and March 2019).  But the OFAC Advisory of May 2020 is far more comprehensive in both its scope and detail than any of the earlier notes. 

Firstly, it is not limited to guidance in respect of specific sanctions targets such as North Korea or Iran (although it does update earlier advisory notes for each of those regimes).  Rather, it is expressed to be comprehensive sanctions compliance guidance to the maritime community generally – as well as to the energy and metals sectors which were not so obviously targeted in the earlier notes.  In this regard the OFAC Advisory can be seen as an industry specific development of an earlier OFAC guidance, its "Framework for OFAC Compliance Commitments" published in May 2019, which set out OFAC's expectations to the world at large of what it expected the essential components of a Sanctions Compliance Program to look like.  

Secondly, in contrast to the briefer earlier guidance notes, the OFAC Advisory sets out detailed guidance of what OFAC expects from a host of key industry participants in terms of sanctions risk management and due diligence – from flag states, port state control authorities and insurers, to owners, charterers, crewing companies and even ship captains.  This more prescriptive guidance illustrates how OFAC expects each industry participant to expand its role in sanctions compliance.  It also highlights a laundry list of what it terms "deceptive shipping practices" that it encourages industry participants to be vigilant against,  and business practices to help identify sanctionable behaviour.  

Whilst the OFAC Advisory repeatedly states in footnotes that "is not intended to be, nor should it be interpreted as, comprehensive or as imposing requirements under U.S. law or otherwise addressing any particular requirements under applicable law," those in the shipping industry are well-advised to read the OFAC Advisory to mean that OFAC expects the maritime and commodities industries to be aware of the guidance and for industry participants to factor it into their sanctions compliance programs.  The adoption of some, or all, of the measures recommended by OFAC will no doubt be factors that OFAC would consider as mitigating any penalties if a violation occurred.  Over time, as industry participants adopt more stringent sanctions compliance measures, it will be difficult (and risky) for others not to do the same.

The OFAC Advisory reflects a heightened awareness of the shipping industry’s interest in cooperation measured with a balance of realism: The OFAC Advisory language reflects a measured approach based on feedback from ongoing discussion with industry sectors, including marine insurers among others.  However, it did not contain any list of questionable vessels and companies, as had been set forth in a prior Advisory, which caused confusion among marine insurers, flag states, shipowners and charterers alike, in assessing whether to continue business with such “suspect'' entities.

OFSI is a much newer body than OFAC; it has only existed in its current form since 2016 when it replaced HM Treasury's Asset Freezing Unit.  Like OFAC, OFSI has until now primarily focused on the financial services sector in leveraging private sector assistance to enforce sanctions.  It has produced helpful general guidance notes on financial sanctions as well as guidance for the charities and the import / export sectors.  But it has not, until now, turned its attention to the maritime industry.    

In common with the OFAC Advisory, OFSI identifies a number of what it terms "illicit and suspicious shipping practices," some of which are referred to by OFAC (AIS disablement, ship to ship transfers, falsified shipping documentation) and some of which are not (e.g. the use of cryptoassets).  Again, similarly to OFAC, it highlights country specific risk factors for the industry in relation to Iran, North Korea and Syria (although the Iran risks identified are notably different to OFAC's given the UK's continued commitment to the JCPOA). And, again similar to the OFAC Advisory, it sets out its views on what due diligence looks like for the industry, albeit at a high level: a proper understanding of the sanctions against high risk jurisdictions if you operate there, the appropriate use of AIS screening and "AIS switch off clauses", enquiries into ownership structures of counterparts and checks on suspected fraudulent documents.  

It is true to say that the OFSI Advisory is, overall, less specific and detailed than the OFAC Advisory.  For example, it does not provide the detailed lists of risk mitigation measures and due diligence protocols that the OFAC Advisory does for each specific industry participant, or as much detail on the structure of a sanctions compliance program for industry participants. 

But the overall thrust of the two Advisories is unmistakable: both governments expect the maritime and commodities industries to do their part in tackling sanctions evasion by the application of appropriate due diligence that identifies bad actors and acts on suspicious or deceptive shipping practices in much the same way as banks and insurers have borne the burden of identifying bad actors using the financial services industry.  The reach of the two enforcement bodies is extensive: OFSI has jurisdiction over a number of key maritime insurers who are based in the UK.  OFAC is responsible for the enforcement of US secondary sanctions that have the capacity to block and designate as sanctioned persons anywhere in the world, not just US persons.  The fact that these two notes have followed each other in short order is instructive: the industry has been put on notice that the two enforcement bodies are looking closely at it.  If the industry continues to aid sanctions evasion by not implementing the risk mitigation tools identified by OFAC and OFSI, the business can expect the sort of attention that the banking industry have received in recent years - - and had to improve their level of due diligence and compliance to match the regulators’ expectations. 

Further notes in this series will look in more depth at particular aspects of the two advisories and the latest developments on the sanctions front lines, including an analysis of what might constitute a reasonable risk-based program for sanctions compliance and due diligence in shipping sectors in light of OFAC and OFSI's focus on deceptive shipping practices, the evolving impact of US sanctions on non-US persons and companies, how to use (and not use) sanctions clauses in maritime agreements and marine insurance policies, and how AIS switch off clauses might (and might not) work.


Photo credit:
Fathromi Ramdlon
Published: 7 August, 2020

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Bunker Fuel

Singapore: Bunker fuel sales down by 9.1% on year in January 2025

4.46 million mt of various marine fuel grades were delivered at the world’s largest bunkering port in January, a drop from 4.91 million mt recorded during the similar month in 2024, according to MPA data.

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Singapore: Bunker fuel sales down by 9.1% on year in January 2025

Sales of marine fuel at Singapore port decreased by 9.1% on year in January 2025, according to Maritime and Port Authority of Singapore (MPA) data.

In total, 4.46 million metric tonnes (mt) (exact 4,461,710 mt) of various marine fuel grades were delivered at the world’s largest bunkering port in January, a drop from 4.91 million mt (4,906,100 mt) recorded during the similar month in 2024.

Deliveries of marine fuel oil, low sulphur fuel oil, ultra low sulphur fuel oil, marine gas oil and marine diesel oil in January (against on year) recorded respectively 1.66 million mt (zero from 1.66 million mt), 2.43 million mt (-15% from 2.86 million mt), 900 (+100% from zero), 3,100 mt (-77% from 13,500 mt) and zero (from zero).

Singapore: Bunker fuel sales down by 9.1% on year in January 2025

Bio-blended variants of marine fuel oil, low sulphur fuel oil, ultra low sulphur fuel oil, marine gas oil and marine diesel oil in January (against on year) recorded respectively 16,000 (+100% from zero), 92,000 mt (+103% from 45,300 mt), zero (from zero), zero (from zero) and zero (from zero).

LNG and methanol sales were posted respectively at 6,600 mt (-36.5% from 10,400) and zero (from zero).

A complete series of articles on Singapore bunker volumes by Manifold Times in 2024 can be found below:

Related: Singapore: Bunker fuel sales down by 5.2% on year in December 2024
Related: Singapore: Bunker fuel sales gain by 4.6% on year in November 2024
Related: Singapore: Bunker fuel sales gain by 10.8% on year in October 2024
Related: Singapore: Bunker fuel sales continue to increase by 2.8% on year in September 2024
Related: Singapore: Bunker fuel sales increase by 7.2% on year in August 2024
Related: Singapore: Bunker fuel sales up by 3.3% on year in July 2024
Related: Singapore: Bunker fuel sales gain 8.7% in June 2024
Related: Singapore: Bunker fuel sales increase by 6.7% in May 2024
Related: Singapore: Bunker fuel sales down by 0.6% on year in April 2024
Related: Singapore: Bunker fuel sales increase by 6.4% on year in March 2024
Related: Singapore: Bunker fuel sales up by 18.8% on year in February 2024
Related: Singapore: Bunker fuel sales up by 12.1% on year in January 2024

 

Photo credit: Maritime and Port Authority of Singapore
Published: 14 February, 2025

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Bunker Fuel

Singapore-based Straits Bio-LNG aims to deliver 250,000 mt of bio-LNG bunker fuel per year

Firm is currently in advanced stage of testing breaking down Empty Fruit Bunch through an established biological process with high enzyme concentration in its R&D facility in Malaysia to produce bio-LNG.

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Singapore-based Straits Bio-LNG aims to deliver 250,000 mt of bio-LNG bunker fuel per year

Straits Bio-LNG, a privately owned supplier of bio-LNG, is aiming to deliver 250,000 metric tonnes (mt) of bio-LNG per year in Singapore, according to SEA-LNG on Thursday (13 February).

The Singapore-based company, led by SK Tan as CEO, is doing so in response to the growing demand for LNG. LNG bunkering volumes have grown significantly in key bunkering hubs as more LNG-fuelled vessels have entered into operation. 

The Maritime and Port Authority of Singapore (MPA) saw a dramatic four-fold increase in 2024 to almost 340,000 mt, SEA-LNG said in a statement announcing Straits Bio-LNG joining the coalition. 

Headquartered in Singapore, the company boasts a growing team led by SK Tan as CEO.  

Yiyong He, Director at Straits Bio-LNG, said: “We’re firmly convinced in the viability of the LNG pathway to decarbonise the shipping industry. With its very low carbon intensity and improving commerciality, liquified biomethane will be a critical piece of the puzzle for decarbonising the sector.”

“By joining SEA-LNG, we’re proud to be part of a collection of first movers making real strides to make the LNG pathway a tangible reality today.”

Straits Bio-LNG aims to reach its bio-LNG supply goal by using pioneering methods. It is currently in the advanced stage of testing breaking down Empty Fruit Bunch (EFB) through an established biological process with high enzyme concentration in its R&D facility in Malaysia. 

Both Palm Oil Mill Effluent (POME) and EFB are sustainable biomass resources listed in the “List of Materials Eligible for ISCC EU Certification” and are therefore compliant with the European Union’s Renewable Energy Directive (RED).

Peter Keller, chairman of SEA-LNG, added: “The Port of Singapore is the largest global bunkering hub. As seen in our View from the Bridge report, 2024 saw record growth in LNG and liquified biomethane bunkering, but we need more fuel to meet upcoming demand.”

“The use of liquefied biomethane as a marine fuel can reduce GHG emissions by up to 80% compared to marine diesel on a full well-to-wake basis. When produced from the anaerobic digestion of waste materials, such as manure, POME or EFB, methane that would otherwise be released into the atmosphere is captured, resulting in negative emissions of up to -190% compared with diesel."

An independent study by the Maritime Energy and Sustainable Development Centre of Excellence at Nanyang Technical University in Singapore found that pure bio-LNG could cover up to 13% of the total energy demand for shipping fuels in 2050, rising to 63% for a 20% blending ratio. 

SEA-LNG added MPA has firmly established itself as a leader in the LNG pathway, with suppliers such as Straits Bio-LNG reinforcing this position. 

Recently, the port launched an Expression of Interest (EOI) to explore scalable solutions for sea-based LNG reloading to complement the existing onshore LNG bunkering storage and jetty capacities and the supply of e/bio-methane as marine fuel in the Port of Singapore.

“Straits Bio-LNG will play a critical role in furthering the expansion of liquified biomethane at scale to meet the demand and continuing to showcase the LNG pathway as a practical and realistic solution for shipowners to decarbonise their operations, starting today,” it said. 

Related: Singapore: MPA launches EOI to expand LNG bunkering services amid growing demand

 

Photo credit: Straits Bio-LNG
Published: 14 February, 2025

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Winding up

Singapore: Final meetings scheduled for Gagarmayang Maritime and related companies

Other companies involved are Pramoni Maritime Pte Ltd, Wulansari Maritime Pte Ltd, Anjasmoro Maritime Pte Ltd and Indradi Maritime Pte Ltd.

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The final meetings of members of Gagarmayang Maritime Pte Ltd and related companies, has been scheduled to take place on 12 March, according to the company’s liquidators on a notice posted on Wednesday (12 February) on the Government Gazette.

The other companies involved in the matter are Pramoni Maritime Pte Ltd, Wulansari Maritime Pte Ltd, Anjasmoro Maritime Pte Ltd and Indradi Maritime Pte Ltd.

The meetings will be held by way of electronic means at 11am for the purpose of having an account laid before the members showing the manner in which the winding up has been conducted and the property of the company disposed of and of hearing any explanation that may be given by the liquidators.

The details of the liquidators are as follows:

Hamish Alexander Christie
c/o H.A. Christie & Co
20 Collyer Quay, #11-05
Singapore 049319

Related: Singapore: Wulansari Maritime Pte Ltd and related companies to be wound up voluntarily
Related: Creditors meeting for Anjasmoro Maritime and affiliated sister firms to be held in Oct

 

Photo credit: Benjamin-child
Published: 14 February, 2025

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