China-based COSCO Shipping Corp is reported to be switching most of its tanker fleet to China-based marine insurers, including ships that are not directly owned by its two sanctioned subsidiaries – COSCO Shipping Tanker (Dalian), and COSCO Shipping Tanker (Dalian) Seaman and Shipmanagement – in a bid to minimize the damage from being blacklisted by the US.
The state-owned shipping giant now has crude and product tankers entered with the Shanghai Shipowners’ Mutual Assurance Association which previously were insured within the International Group of P&I clubs.
COSCO has a 49-strong fleet of VLCCs, suezmax and aframax tankers linked to the sanctioned COSCO subsidiaries, and these are now said to be entered with the Chinese mutual, reported Lloyd’s List.
Even though the US Treasury specifically excluded the COSCO parent from the sanctions imposed on two of its subsidiaries, questions were still raised by charterers about the risks of chartering or providing services to all tanker tonnage that sailed under the COSCO brand.
Banks, class societies, charterers and bunker suppliers have all expressed concern at potential exposure to unilateral US sanctions on Iran because COSCO’s ownership structures are opaque.
Meanwhile, COSCO has begun operating tankers with AIS tracking turned off. Up to a third of COSCO Shipping Tanker (Dalian)-owned tankers have switched off their automatic identification system (AIS) transponders since OFAC imposed sanctions on the company on September 25th, according to data from Refinitiv Eikon.
Intertanko president Paolo d’Amico said that the sanctions made up to 50 VLCCs “untouchable”. That in turn saw tanker spot rates more than treble to over $120,000 a day for VLCCs, $80.000 for suezmaxes and $70.000 for aframaxes.
Bloomberg data showed that Chinese oil imports from ship-to-ship transfers have surged in recent weeks as a means to get around the sanctions.
The impact has not only been on crude oil tankers. China National Offshore Oil and Gas Company (CNOOC) was reportedly looking for liquefied natural gas (LNG) tankers to charter, looking to replace ships it had previously hired from COSCO Dalian.
The demand by CNOOC for LNG tankers caused freight rates to nearly double to around $140,000 a day, from about $80,000 late last week, shipbrokers told Reuters.