Panama Pulls Flag on Sanctioned LNG Carriers in Crackdown on Russia’s Shadow Fleet

In response to recent U.S. sanctions, the Panama Maritime Authority (PMA) has initiated the process to deregister four LNG carriers linked to Russian gas producer Novatek.

This move targets the North Air, North Mountain, North Way, and North Sky, all vessels operated by Singapore-based LNG companies under the ownership of New Transhipment FZE, a UAE subsidiary of Novatek.

Sanctions against the four vessels were part of a sweeping sanctions package announced by the U.S. Department of State in August, with allegations that these ships form part of Russia’s “dark fleet,” a network suspected of evading Western sanctions to transport super-chilled gas from the Russia’s sanctioned Arctic LNG 2 project.

The PMA’s cancellation process began on October 4, even before Panama’s Executive Decree No. 512, issued two weeks later, enabled the government to fast-track such actions. The decree gives the PMA increased authority to take action against vessels under its registry that are suspected of sanction evasion or illicit activity.

“Panama will not serve as a sanctuary for sanctioned vessels,” the PMA said in a recent statement, adding that it will swiftly cancel the registration of any vessel linked to illegal activities or which changes its flag to evade sanctions.

Strengthening the World’s Largest Ship Registry

With over 8,000 vessels and a combined tonnage of 250 million GT, Panama’s Ship Registry is the largest in the world by number of ships. In response to the growing number ships sanctioned related to Russia’s war in Ukraine, the PMA has reinforced its oversight measures, restructuring its monitoring framework and launching the “Panama Flag Precheck Process” this past September, aimed at combatting sanctions evasion and maintaining the integrity of its ship registry.

The initiative tightens due diligence for new registrations, ensuring that vessels meet international compliance standards before flying Panama’s flag.

To further deter sanctions evasion, Panama recently joined the Registry Information Sharing Compact (RISC), a collaborative initiative to prevent vessels from “registry-hopping” to sidestep sanctions. This follows the transfer of the Monitoring and Control Section to the Maritime Ship Protection Department, bolstering the PMA’s capabilities to identify and act against vessels operating unlawfully under the Panamanian flag.

Legal Mechanisms and Panama’s Stance on Compliance

The PMA’s latest action signals Panama’s zero-tolerance stance on sanction evasion.Panama’s legal arsenal includes Article 49 of the General Law 57 of the Merchant Marine, which empowers the PMA to cancel a vessel’s registration when there’s evidence of sanction violations.

According to the PMA’s General Directorate of Merchant Marine, further regulatory measures are under consideration to enhance Panama’s responsiveness to illicit maritime activity.

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