Panama Tightens Ship-to-Ship Oil Transfer Rules in Bid to Combat Shadow Fleet Operations

Panama has implemented stringent new requirements for ship-to-ship (STS) oil transfer operations involving vessels under its flag, marking a significant step in its efforts to combat sanctions evasion and illicit maritime activities.

Through Resolution No. 106-035-DGMM of 2025, published on May 6, 2025, the Panama Maritime Authority (PMA) has established mandatory traceability protocols for offshore STS transfers of hydrocarbons.

The new regulation requires all Panama-flagged vessels with a gross tonnage of 150 or more to provide 48-hour advance notice before conducting any STS operation. Vessels must submit comprehensive technical and operational details, including vessel identification information, operation coordinates, timing, and transfer methods.

“This initiative addresses the growing use of opaque vessels to circumvent international sanctions, transport undeclared crude, or evade environmental safety regulations—practices commonly associated with what is known as the shadow or dark fleet,” explained DGMM Acting Director, Engineer Rina Berrocal.

The timing of this regulatory tightening is significant, as recent analysis by United Against Nuclear Iran (UANI) revealed that Panama currently flags 17% of vessels suspected of participating in illicit Iranian oil transfers. The organization’s tracker has identified 542 foreign vessels potentially involved in transporting sanctioned Iranian crude and petroleum products.

Despite some progress, including the March 2025 deregistration of 107 vessels linked to sanctions violations, Panama continues to face criticism over its enforcement practices. Just last month, two Panama-flagged vessels were among three ships sanctioned by the U.S. Treasury Department for delivering oil and gas to Yemen’s Houthi rebels.

The new requirements align with International Maritime Organization (IMO) standards and the MARPOL Convention, reflecting Panama’s stated commitment to maritime safety and operational transparency.

“This is not just about safeguarding the reputation of the Panamanian registry,” Berrocal emphasized, “but about ensuring that our vessels are not used as platforms for illicit activities that undermine global trade and harm the environment.”

The move follows the October 2024 enactment of Executive Decree No. 512, which empowers the PMA to unilaterally remove vessels from its registry if their owners appear on international sanctions lists. However, maritime security experts argue that more comprehensive reforms are still needed to address persistent enforcement gaps in what remains one of the world’s largest ship registries.

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