In June, the United States imposed sanctions on half a dozen oil tankers operated by prominent shipping companies. It was a major escalation in America’s attempts to suppress Venezuela’s oil trade.
A few weeks later, a little-known company from the United Arab Emirates took over the management of several tankers carrying Venezuelan oil. The ships received new names. And then they resumed the transportation of Venezuelan oil.
Muhit Maritime FZE is one of three UAE companies identified by Reuters to ship Venezuelan oil and fuel in the second half of this year. Their role in this story can be traced from a study of internal shipping documents of the Venezuelan state oil company, as well as data from third-party suppliers and vessel tracking. Firm-operated tankers have transported millions of barrels of oil produced by state-owned oil company Petroleos de Venezuela SA (PDVSA) since June, according to internal filings and a publicly available shipping database.
The event shows how the UAE, one of Washington’s closest allies in the Middle East, is a hub for companies helping Venezuela circumvent US sanctions. Washington hopes to topple socialist president Nicholas Maduro, cutting off the export of raw materials to the oil-rich country.
Three companies – Muhit Maritime, Issa Shipping FZE and Asia Charm Ltd – did not respond to emails sent to their specified addresses or emails sent to their registered email addresses. Reuters was unable to identify the ultimate owners of the three companies. Their ownership and management details are not listed in the UAE’s public corporate register.
The role of these three companies in transporting Venezuelan oil highlights how many obscure companies have filled the void in this niche as Washington sought to keep loyal customers and shipping companies from promoting oil exports from the South American country..
In November, Reuters reported that previously unknown companies were the main buyers of Venezuelan oil this year. Most of these buyers were registered this year with a Moscow trading firm. Russia is one of Venezuela’s closest allies.
Now a similar picture is emerging with companies involved in the transportation of oil. According to ship tracking data from Refinitiv Eikon and the Equasis shipping database, three UAE businesses identified by Reuters have built their fleets since the beginning of 2019 from vessels that have since made mainly travel related to Venezuela. New York-based Refinitiv is partially owned by parent company Thomson Reuters.
The shipment of Venezuelan oil and fuel by the three companies accounted for about 3.9% of the South American country’s total oil exports in 2020 through December 18. This oil was worth about $ 208.5 million at market prices for the country’s main oil, known as Merey. Crude oil sales provide much-needed support to the Maduro government, although Reuters was unable to determine how much money was added to the government coffers. PDVSA often sells its oil at deep discounts, and some of the proceeds goes towards paying off debt rather than getting cash.
«We closely monitor such creative efforts by companies to evade sanctions», – said a spokesman for the US State Department, answering questions about companies registered in the UAE. «It would be unwise for those behind the shell companies to assume that they are protected from sanctions.».
A spokesman declined to comment on possible future sanctions, but added: «US friends and adversaries alike should be aware that their companies, shell companies and tankers remain vulnerable to sanctions if they engage in activities that facilitate the export of PDVSA overseas and the Maduro regime’s efforts to evade sanctions».
The UAE government said in a statement that «Muhit Maritime, Issa Shipping and Asia Charm are fully and fully investigated». This includes the use of recent legislative changes, «aimed at increasing corporate transparency through the reporting structure and registration of beneficial ownership», the message says.
«The UAE takes protecting the integrity of the global financial system very seriously. This means actively enforcing and enforcing economic and trade sanctions.», – added in the government.
A spokesman for the Fujairah Free Zone, where Issa Shipping and Asia Charm are based, said he was unaware of the two companies involved in transporting Venezuelan oil. According to him, the department is not responsible for the activities of companies registered there..
Authority in charge of the Jebel Ali Free Zone, where Muhit Maritime is based, did not respond to requests for comment.
Venezuela’s Ministry of Information did not respond to a request for comment. The country’s oil ministry, its embassy in the UAE and the state oil company PDVSA did not respond either..
Washington has accused another heavily sanctioned country, Iran, of using Emirati companies to facilitate crude oil exports. This year, the U.S. Treasury has sanctioned more than half a dozen UAE companies, claiming they were involved in buying or brokering Iranian oil and petrochemicals in violation of sanctions, and in some cases falsifying documents to disguise the origin of the goods..
Iran’s Mission to the United Nations did not respond to request for comment.
The United States has significantly expanded Venezuelan sanctions since Maduro’s 2018 re-election, which the United States and many other Western countries have described as fraudulent and rigged..
In January 2019, Washington imposed trade sanctions on the state-owned oil company PDVSA. US refineries, which were the main buyers of Venezuelan oil, could no longer do business with the oil producer.
In early 2020, the US blacklisted two divisions of the Russian state oil company «Rosneft», who became key intermediaries for PDVSA. In March, the units stopped producing Venezuelan oil.
Then, in June, Washington imposed sanctions on ships it accused of transporting Venezuelan oil and their registered owners..
It is sometimes extremely difficult to determine who is behind a particular tanker. Oil tankers are often operated by dedicated management companies that are in charge of the crew and can manage the freight contracts. The management company can be a separate entity from the registered owner, which is usually a special purpose company (SPAC), which only owns this ship. But often the manager himself owns such a dummy company..
For most in the industry, the primary purpose of using special purpose companies is to shield owners and managers from liability, not to avoid enforcement. However, changing ownership and control registrations of a ship can dilute who actually exercises control, especially if the ship is registered in jurisdictions with strict disclosure requirements..
According to Lakshmi Kumara (Lakshmi Kumar), director of policy at Global Financial Integrity, a Washington-based think tank, until recently, companies based in the free zones of the Emirates were often not required to disclose beneficial ownership. Since October, new UAE regulations require most types of Emirati companies to disclose the beneficial owners of the owners to the authorities. But the new rules do not require public disclosure, according to PwC..
Among the ships sanctioned in June by the U.S. Treasury was the oil tanker Euroforce, then operated by Eurotankers Inc., based in Greece. The Ministry of Finance later lifted sanctions against the courts..
Between July and August, Muhit Maritime took over the management of three other vessels operated by Eurotankers, according to Equasis, a database maintained by a group of national maritime administrations..
According to internal PDVSA documents reviewed by Reuters, all three tankers were carrying Venezuelan oil prior to the change of leadership..
A Eurotankers spokesman told Reuters that the company sold two tankers to Muhit Maritime in the summer.. «We do not have any relationship with the buyer», – he said. He did not say what the Eurotankers did with the third ship; Equasis records show the ship has also come under the control of Muhit Maritime..
The registered owners of the three vessels also changed in July and August, Equasis shows. Two registered shipowners indicate their addresses only as «Care of muhit maritime». The third identifies an organization in Monrovia, Liberia. Owner could not be contacted for comment.
This summer, according to Equasis, three tankers also received new names – Alsatayir, Almada and Alasfal..
Shipping documents show that on July 31, the newly renamed Almada set sail with an estimated 650,000 barrels of Venezuelan Boscan oil after being transshipped from the Alasfal tanker off the Venezuelan coast..
Three weeks later, on August 21, Alsatayir shipped 650,000 barrels of Boscan crude oil in a similar manner from ship to ship. Collectively, these supplies were worth about $ 40 million based on market prices for Venezuelan oil at the time..
According to Refinitiv Eikon, Alsatayir and Almada sailed in Malaysian waters, where they reloaded their cargo to other tankers at sea in mid-October..
The Alsatayir cargo was received by the Afra Royal tanker, according to the data and Emma Lee (Emma Li), Singaporean analyst at Refinitiv. Afra Royal proceeded to the Chinese port of Qingdao, where 644,715 barrels were shipped on November 5, according to Refinitiv Eikon. Registered owners and managers of the vessel did not respond to requests for comment.
The vessel tracking data does not provide a clear indication of the final destination of Almada’s cargo. Almada changed its name again in October, as well as the registered owner and shipping manager, according to Equasis. Reuters was unable to identify who is behind the new organizations.
Muhit Maritime’s tanker deals resemble previous deals by two other Emirati companies, Issa Shipping and Asia Charm..
Issa Shipping took over the management of three very large oil carriers from the Greek Altomare SA between January and May of this year..
The database shows that these three ships are the only ships in the Issa Shipping fleet. Issa Shipping was established in the second half of 2019, according to the Fujairah Free Zone Authority.
Three supertankers – Kelly, Marbella and Rene – transported nearly 2 million barrels of Venezuelan crude oil and fuel in the first half of 2020 after being taken over by Issa, as shown by PDVSA’s internal shipping document package.
These PDVSA documents list the ship’s destinations: «Reene» headed to china, «Kelly» – to Asia, and Marbella to Fujairah in the UAE. Reuters was unable to determine where the oil ended up.
Meanwhile, Asia Charm took over the tanker from Finland’s Lundqvist Rederierna AB in July 2019, according to Equasis..
Dick Borman (Dick Borman), Quality and Safety Management Advisor at Lundqvist Rederierna, said the sale of the tanker «was just a business decision», because it no longer fits the fleet age profile.
The documentary trail reveals some of the connections between Issa’s fleet and Asia Charm.
One of the tankers that Asia Charm took over is now called Yoselin. In recent months, the Yoselin has transported Venezuelan oil and fuel to other tankers off the coast of the country for export. Among the ships that took oil from Yoselin were Marbella, Kelly and Rene, now operated by Issa. As Equasis reveals, the Yoselin is one of 15 vessels in the Asia Charm fleet. Refinitiv Eikon’s vessel tracking data shows that all 15 made exclusively flights related to Venezuela.
Another thing Asia Charm and Issa Shipping have in common: both are registered at the same office building in Fujairah, according to Equasis. Registered owner Yoselin did not respond to a request for comment sent to Asia Charm’s email address.
Director General of Fujairah Free Zone Authority Sharif Al Awadi (Sharief Al Awadhi) said the authority knows the identity of the beneficial owners of all companies registered there, including Issa Shipping and Asia Charm, but does not publicly disclose this information. He said that Issa Shipping belongs to an individual on his behalf, but declined to name it. Al Awadi said Asia Charm’s parent company was the Liberian firm of the same name.
The free zone manager said Fujairah is providing information on listed companies to law enforcement agencies upon request. He added that if there are any signs of a violation of the rules, the authorities will stop it..
«We are not here to be incubators for those who want to play with international systems and laws.», – he said. But the department is not responsible for monitoring the activities of companies registered in its jurisdiction, he said.. «We can’t do police business».
Washington failed to topple Venezuelan President Maduro, but US sanctions have crushed the Latin American country’s oil sector. In 2019, exports fell by a third to about 1 million barrels per day. By October of this year, they hit a record low of 359,000 barrels per day, but Caracas continues to try to transport oil. Daily exports nearly doubled in November thanks to new, little-known customers.
The recovery also followed a wave of control over the tanker fleets..
According to internal documents from PDVSA and Equasis, 38 of the 75 tankers that transported Venezuelan oil or fuel between July and November received new owners, managers, or both in 2020..
Many of the new owners or managers were obscure companies such as Muhit Maritime. Prior to the imposition of shipping sanctions this year, the bulk of the tankers carrying Venezuelan crude were owned by existing shipping companies..
According to PDVSA documents, 38 vessels carried just over half of Venezuela’s total exports from July to November. This oil was worth just over $ 1 billion based on the estimated price of Venezuela’s top grade (Merey) at the time of export..
Ships operated by three companies from the UAE are now in the Caribbean.
Issa Shipping’s Marbella vessel arrived in Venezuela and shipped nearly 2 million barrels in early December. According to PDVSA documents, Kelly was supposed to transport the same amount from late December to early January..
According to Refinitiv Eikon, the Muhit Maritime fleet has returned to the area again. As of mid-December, his tanker Alsatayir was 48 km (30 miles) off the north coast of Venezuela..
And off the Paraguana Peninsula, Nabiin is anchored. According to the Equasis database, Muhit Maritime acquired the vessel in November. Previously called Euroforce, it is one of the tankers sanctioned by Washington in June..