The NS Concept is a colossal red-and-yellow oil tanker with an international background almost as colorful as its paintwork. It sails under the flag of Liberia; was built in South Korea by Hyundai, and is owned and commercially managed by Russia’s Sovcomflot. But of late it’s been mostly nowhere in particularly, drifting in international waters, with US sanctions sending it wildly off-course.
This tanker is one of as many of a dozen left in limbo off the Venezuelan coast due to US sanctions on the nation’s oil exports. Some, laden with as many as two million barrels of oil apiece, are waiting just offshore. Others, like the Concept, have been forced out to sea after being rejected from their intended destination in the US. While Venezuela maintains that its oil exports remain high, they seem to be counting the total tanker loadings, and not actual departures or off-loadings, Samir Mandani, co-founder of TankerTrackers.com, told Quartz. “What you get is a large parking lot of floating storage,” he said. “Actual exports are now sub-one million barrels per day.”
Just as tankers full of oil find themselves unable to dock, other tankers are reportedly hauling seawater, for ballast, around instead of their usual, more valuable cargo. Soaring US production, reductions in OPEC output, and these recent sanctions are making it harder for them to find oil to haul on multiple legs of their round-the-world voyages as they do ordinarily. “The result is a procession of empty supertankers making voyages of as much as 21,000 miles to the U.S. direct from Asia, all the way around South Africa, holding nothing but seawater for stability,” Julian Lee, an oil strategist, explained in Bloomberg.
For ship owners, these are expensive developments. Oil tankers earn money when they’re full of oil and moving briskly from port to port. But complex geopolitical factors have made it harder for them to do so—with the bottom line taking the hit. Owners of tankers forced to reroute, go massively off-course, or sit idle for days or weeks at a time face unexpected financial pressures. Whether they can shift the costs to producers and refiners—and subsequently raise oil prices—remains to be seen.
Earlier this year, the Concept departed Venezuela for Houston, carrying half a million barrels of Venezuelan oil. By the time it arrived at the American port, however, the US Treasury Department had imposed sanctions on PDSVA, the Venezuela state-owned oil firm, making it illegal for the oil to be unloaded. For the next six days, the tanker sat at the port before being turned around and sent back out into the Gulf of Mexico, where it eventually moored at the Dutch island of Sint Eustatius, around 240 miles east of Puerto Rico.
There, according to Tanker Tracker, the Concept transferred its oil to an enormous Saudi tanker, the Ghazal. It is now headed for the port of Kaohsiung, in Taiwan, estimated to arrive April 5, though whether or not it will unload its cargo when it arrives, or carry it on to another port, is currently unclear.
There are other odd ripples from these sanctions. Earlier this month, Panama agreed to remove a total of 60 Iranian vessels from its ship registry of more than 8,000 tankers to avoid being blacklisted by the US. Ship owners often choose to register their ships in an unrelated country as a way to avoid financial charges or other regulations in the shipowner’s country. It’s a boon for small nations such as Panama and the Bahamas, which pull in easy earnings from tonnage tax and registration fees through their “open registries” or “flags of convenience,” where ship owners are not required to be tied to the country in any way.
US sanctions may explicitly be on Venezuela and Iran, but other countries caught up in the crossfire stand to get hurt, too. In a market in which one ship may be tied to three or four nations, and “flagged” under yet another, even the most targeted of sanctions may have unintended victims.