North Korea keeps sneaking in oil with secret ship-to-ship transfers
SINGAPORE — Donald J. Trump’s desire to squeeze Kim Jong Un’s regime risks being undermined by the furtive maneuvers of oil tankers at sea.
The enforcement of international measures limiting sales to North Korea — part of an effort to force Mr. Kim to abandon nuclear weapons — is becoming near impossible because suppliers of illicit fuel are using an old oil-trading practice that helps obscure its origin and destination.
Ship-to-ship transfers (STS), when cargoes are pumped from one tanker to another in the ocean, are legal and typically used to break up large oil shipments into parcels on smaller vessels. But they can also be used as a trick that makes it difficult to track supplies, and have been barred by the United Nations for sales to North Korea.
And even if the tankers can be identified, seized and inspected, culprits are hidden under layers of ownership. A controversy that erupted last week over a shipment of fuel to the rogue nation has so far entangled the world’s third-biggest independent oil trader, a Hong Kong-based commodity company and mysterious shipping firms in Taiwan and the Marshall Islands. South Korean authorities have failed to identify the perpetrator and on Thursday said they are still investing who owned the cargo.
“These STS transfers can happen 200 nautical miles or more out at sea, as long as conditions are calm, where no one’s looking,” said Rahul Kapoor, an analyst with Bloomberg Intelligence in Singapore. “It’s very easy to black out a ship and hide it.”
All ocean-going ships are equipped with a beacon that broadcasts their location around the world, so if a vessel tried to directly load or discharge oil in a sanctioned country, it could be identified. To get around that, two tankers can turn off their transmitters, known as the automatic identification system, rendezvous in secret and transfer the cargo, masking the true origin and destination of the shipment.
A vessel, the Lighthouse Winmore, is said to have transferred 600 tons — about 4,000 barrels — to a North Korean vessel, the Sam Jong 2, on Oct. 19.
Ship-tracking data compiled by Bloomberg showed Lighthouse Winmore making trips between Kaohsiung in Taiwan and Yeosu in South Korea during September and October.
The vessel data, which are broadcast by ships voluntarily and cannot be independently verified, showed it south of Yeosu, with its destination listed as Taichung, Taiwan, on Oct. 15. The ship stopped reporting its location for the next 10 days, virtually disappearing during the period of the alleged transfer. The next transmission was Oct. 25, further to the south near Jeju Island.
While STS transfers are an integral part of the oil and fuel-trading business, “when in the wrong hands, this everyday operation can be misused,” said Den Syahril, an analyst at industry consultant FGE in Singapore. “During past sanctions, there’s a possibility that ships with Iranian fuel turned off their trackers and conducted these operations in the Middle East gulf, only to have the cargo labeled as Middle East origin afterwards.”
CONTROVERSIAL TRADES
Now that the practice is in the spotlight, it may become harder to get away with it. Reports that US satellites have been capturing Chinese ships transferring fuel to North Korean vessels could deter perpetrators while major oil trading companies may take additional precautions not to be involved in the controversial transactions.
On Tuesday, South Korea’s foreign ministry said Trafigura Group owned the Lighthouse Winmore cargo and authorities were investigating whether it ordered the transfer to North Korea. Within a few hours, the trading house denied it was involved in the illicit transaction, saying it neither owns nor chartered the ship. —