EUROPEAN sanctions banning ships from entering EU ports that have engaged in deceptive ship-to-ship transfers or deliberately switched off Automatic Identification System signals are expected to be agreed imminently, Lloyd’s List understands.

The European Union is nearing the completion of its 11th package of sanctions targeting Russia and while several elements of the original proposals have been watered down, it is understood that the elements of the text targeting deceptive shipping practices are now expected to be passed.

But Greece is holding out from agreeing the text unless its shipowners and companies listed by Ukraine as “international sponsors of war” are removed from the list, even though their tankers shipping Russian oil are complying with sanctions, according to a report by Politico.

The text remains a draft agreement and open to last minute changes.

Senior sources who have seen and discussed the current text said it now has sufficient support from countries to secure an agreement either this week or early next week.

The text proposes a notification system between EU member states flagging ships to be banned from ports.

The final detail of the enforcement mechanism is yet to be agreed and it remains unclear whether bans would be issued on a voyage basis or more permanently.

Lloyd’s List understands that the enforcement of the rules will be made at the discretion of individual member states and the text will include a grace period of about 30 days.

While that suggests a significant watering down from initial versions of the text, if the ban is passed it will mark the first step towards EU states codifying and enforcing the restriction of ships engaging in illicit practices on a harmonised EU-wide basis.

Under the new rules, member states would be obliged to notify other governments of deceptive shipping practices identified and any vessels included in the notification procedures would effectively be banned from entering other EU ports. It is not clear whether there would be any centralised guidance from the commission to define what is and is not considered to be a deceptive shipping practice.

The EU has been struggling to agree the wider details of this latest package of sanctions which are thought to contain a new mechanism to punish countries that enable sanctions evasion.

Both Hungary and Greece have linked sign-off to having companies listed by Ukraine as war sponsors struck off the list, according to the Politico report.

TMS Tankers Limited, Minerva Marine Inc, Thenamaris Ships Management, Delta Tankers and Dynacom Tankers Management are all named on the Ukraine list, along with some of Greece’s most prominent private shipowners who own these companies.

Greece-owned tankers comprised some 47% of all tankers calling at Baltic and Black Sea Russian ports in May, according to Lloyd’s List Intelligence vessel-tracking data.

Concerns expressed by several EU countries, including heavy hitter Germany, have seen successive drafts reworded repeatedly given fears that such a mechanism would hurt diplomatic relations, and even drive countries into the arms of Russia and China.

Rather than hitting the countries that are allowing sanctioned goods to be re-exported to Russia, Politico last week reported that Berlin is proposing to focus on companies, which could ultimately see shipping once again in the crosshairs of new sanctions.

The imminent agreement of new European measures comes as the US is understood to be considering options to disrupt the so-called dark fleet and has been urging European counterparts to step up enforcement of existing sanctions targeting shipping.

US government officials have privately conceded that the sanctions and price cap approach to date has effectively pushed increasing numbers of ships into the dark fleet and their tactics will therefore have to adapt.

The perception that existing sanctions are being evaded has strengthened political resolve in Washington and Brussels that circumvention must be urgently addressed.

European Commission President Ursula von der Leyen specifically promised to “ban ‘shadow’ entities from Russia and third countries who are intentionally circumventing our sanctions,” last month during a press conference alongside Ukraine’s President Volodymyr Zelenskyy.

The European Commission, meanwhile, has cited a “sharp increase in deceptive practices, and related environmental risks” by vessels trying to circumvent the G7 price cap and a ban on imports of Russian oil to the bloc.

While EU companies are barred from providing an array of services for crude oil transportation unless the cargo on board is purchased at or below the G7 price cap of $60 a barrel, several member states have become frustrated by the lack of enforcement and blatant circumvention.

In early February, Spanish authorities sent a letter to local shipping services firms reminding them that facilitating the activity risks breaching sanctions, however, EU member states have not pursued any maritime companies over sanctions breaches.

Separately, several states including Spain lobbied the International Maritime Organization during successive meetings this year to address dangerous STS transfers of oil taking place in the open ocean, which increases the risk of spills and high-cost environmental clean-ups.

“There has been an increase in the frequency of STS crude oil transfers in international waters by ships using ‘dark operations’ to circumvent sanctions and high insurance costs,” a submission authored by Australia, the US and Canada, but supported by several EU states, explained to the IMO’s Legal Committee.

The commission’s latest package of sanctions proposals are due to be discussed by member state officials later today.

* Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined by US State Department guidance issued in May 2020. The figures exclude tankers tracked to government-controlled shipping entities such as Russia’s Sovcomflot, or Iran’s National Iranian Tanker Co, and those already sanctioned. Download our explainer on the different risk profiles of the dark fleet here