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Stock Photo: SOMKIET POOMSIRIPAIBOON / Shutterstock

China Ramps Up Safety Checks on Old Ships as Dark Fleet Grows

Bloomberg
Total Views: 2587
May 19, 2023

(Bloomberg) —

A major port in China is stepping up checks on older vessels, snarling some cargoes and highlighting concerns around the steady expansion of a fleet of aging ships ferrying Russian oil around the globe.

In recent weeks, at least two tankers that are more than 20 years old spent almost a month waiting to make deliveries of crude into the world’s largest importer, including one from Russia, as the stricter checks in Shandong province hamper deliveries.

The supertanker Titan was detained when it arrived at the port of Qingdao for several fire-safety issues, including oil accumulation in its engine room, according to a database of inspections in the Asia-Pacific region. The vessel has since been released and left Qingdao, according to tracking data. It’s unclear whether the Titan was able to unload its cargo in China.

Another old tanker that’s carrying Russian oil, the Ocean Peri, has been waiting near the same port for almost a month.

Both vessels have had difficulty unloading at Qingdao as the local maritime authority is carrying out heightened safety scrutiny of foreign ships that are more than 15 years old, according to people familiar with the matter.

Restrictions on Russian oil have prompted a surge in purchases of old tankers by undisclosed buyers, many of them older ships that would in years gone by have often been candidates for the scrap heap. Ports often filter arriving vessels by age when deciding which ones to inspect, potentially ensnaring those coming from Russia and other sanctioned regions such as Iran and Venezuela.

Enhanced Scrutiny

Senior shipping-industry figures have been voicing concern about the risks posed by inexperienced ship owners and operators, which are often subject to less rigorous safety regimes and are registered in more relaxed regulatory environments. Insufficient documentation as well as inadequate safety checks at origin ports have raised the concern of Chinese maritime authorities, the people familiar with the scrutiny said. Calls to the media office of the Shandong Maritime Bureau weren’t answered.

If China were to insist on vessels arriving at its ports having industry-standard insurance cover, Russian cargoes would have to be purchased at $60 a barrel or less to comply with the Group-of-Seven price cap on the country’s crude shipments. Vessels found to be in safety violations will need to reapply for their certificates before entering the port areas, and it remains unclear how long that will take and how many more older ships will be affected.

The Titan is sailing under the flag of Cameroon and doesn’t have such cover from the International Group of P&I Clubs. Ocean Peri is sailing under the flag of Palau and also lacks industry-standard insurance. 

China is resuming more robust maritime safety checks after Covid Zero policy got dismantled, the people familiar with the checks added.

–With assistance from Sherry Su and Alaric Nightingale.

© 2023 Bloomberg L.P.

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