Panama has canceled the registrations of dozens of sanctioned ships, potentially damaging Russian oil exports.
The Panama Maritime Authority is in the process of canceling the registration of 128 ships as part of a clampdown on blacklisted vessels, Bloomberg reported.
The outlet said the move is part of a crackdown on vessels that help Russia circumvent Western sanctions on oil exports via a “shadow fleet” whose links to Moscow are hidden. The sanctions were imposed to punish Russia for its full-scale invasion of Ukraine.
UK Friends of Ukraine, part of a campaign led by Razom We Stand calling for stricter measures against Russia’s fossil fuel exports, told Newsweek it welcomed Panama’s move, but the Central American country needed to go further.
After Vladimir Putin’s full-scale invasion of Ukraine, the G7 and EU led sanctions targeting Russia’s lucrative oil sector to choke off funds for its war machine.
These included a $60 price cap on a barrel of seaborne oil. but Moscow responded by creating a shadow fleet of vessels whose ties to Russia were obscured. It allowed Russia to sell to its major buyers such as China and India, sidestepping the price cap and insurance restrictions imposed by Western sanctions.
As home to the world’s largest ship registry, Panama is renowned for providing a “flag of convenience” for vessels but appears to be responding to growing global pressure to tackle sanctioned regimes, such as Russia and Iran.
After a pledge last year to penalize blacklisted vessels, Ramón Franco, general director of merchant marine at the Panama Maritime Authority, said at least 70 tankers had been removed and dozens more would follow, costing up to $2 million in revenue.
Franco said that Panama would not be left behind in the face of the industry’s current challenges, one of which is sanctions.
Panama made changes last October that speed up removing a ship from its registry—down from six months to as little as a week, Franco added.
Russia could face a problem with the move, which follows Germany’s seizure of the tanker Eventin. The vessel was carrying 100,000 tons of Russian oil under the Panamanian flag when it lost control in the Baltic Sea in January and had to be towed by German vessels.
Imogen Payter, UK Friends of Ukraine director, told Newsweek it was welcome that Panama was playing its role in helping to sink Russia’s shadow fleet, but the country needed to go further to stop being used by Moscow to evade sanctions.
A briefing note released Thursday by Razom We Stand, and its partners such as UK Friends of Ukraine, which was seen by Global Defense Corp, said Russia’s shadow fleet consists of at least 848 tankers—463 crude oil carriers and 385 oil product carriers.
Of these, only 338 vessels had been sanctioned by at least one of the key sanctioning jurisdictions such as the EU, the U.K., Canada and the U.S.
Only 25 vessels were sanctioned by all four jurisdictions. Russia was exploiting this fragmented approach to sell its fossil fuels, which showed the urgency of collective action to curb oil revenues, the Razom We Stand report added.
Ramón Franco, general director, Panama Maritime Authority, said, per Bloomberg: “We definitely are not going to be left behind in the face of current challenges of the industry and, of course, sanctions are one of them.”
Imogen Payter, UK Friends of Ukraine director, said: “(I) welcome the news that Panama is now playing its role in helping sink Russia’s shadow fleet, though I do think Panama needs to go further to stop Russia using the country to evade sanctions.”
International scrutiny of Russia’s shadow fleet will continue, but Moscow may try to stay one step ahead of sanctions by reflagging vessels to more-lenient jurisdictions.
Svitlana Romanko, founder of Razom We Stand, said in a statement to Global Defense Corp that Panama’s decision was positive, but Russia’s shadow fleet is adaptable. Unless all major flag registries follow Panama’s lead and coordinate action, Moscow will continue to exploit loopholes to sustain its war, Romanko added.
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