US sanctions prompt Greek shipowners to cease Venezuela oil activity

London — Greek shipowners have pledged to stop commercial activity with Venezuela, after four oil tankers managed by Greek companies were blacklisted under US sanctions for traveling to the Latin American country.

The Union of Greek Shipowners said in a statement that it "remains committed to implementing US sanctions measures and would continue to urge its members to refrain from conducting any business with Venezuela until there is a change in regime."

Theodore Veniamis, president of the Union of Greek Shipowners, met the US ambassador to Greece earlier in the week to express the union's commitment to the US sanctions, the statement said.

A large chunk of the world's global tanker fleet is managed by Greek companies and sources said this could have a significant impact on Venezuela's crude exports in the coming months.

On June 2, the US Treasury sanctioned four shipping companies and their crude tankers for continuing to facilitate oil trading with Venezuela.

All four tankers -- Athens Voyager, Chios 1, Voyager 1 and Seahero -- are commercially operated by Greek companies.

The registered owner of Athens Voyager is Afranav Maritime of the Marshall Islands but the Aframax is commercially operated by Greece's Chemnav Shipmanagement.

Similarly, the Chios 1 and Seahero are managed by Dynacom Tankers and Thenamaris respectively, both headquartered in Greece.

The Voyager 1 is commercially operated by Piraeus-based NGM Energy.

Last week, Thenamaris said it had adopted a firm policy "prohibiting any carriage of crude oil from Venezuela for its vessels under management" as long as US sanctions against Venezuela remain in place.

"In light of the evolving US sanctions policy towards Venezuela, Thenamaris is fully cooperating with US authorities to work toward a prompt resolution of the June 2 sanctions designations imposed on Adamant Maritime Ltd. and Seahero under its management," it said.

In the past, US sanctions on countries have had significant impacts on the spot dirty freight market, with last year's sanctions on Chinese state-owned tanker company Cosco being a prime example.

On September 25, 2019, the US Treasury Department imposed sanctions on two units of Cosco for transporting Iranian oil.

This caused freight rates on the spot market to jump $71.02/mt, or 361.61%, to $90.66/mt by October 11 on the 260,000 mt route from West Africa-to-China.

More tanker sanctions likely

The global tanker market is coming under intense scrutiny as the US considers imposing additional sanctions on oil tankers that have recently loaded oil from Venezuela, as it seeks to choke the Latin American country's oil revenues.

Several shipping sources said the US government is looking to penalize over 50 tankers that have either loaded from Venezuela or have carried Venezuelan oil via ship-to-ship transfers.

Some charterers, especially those in the US, Brazil and even in China, have started to avoid ships that recently visited Venezuela.

Tankers that have recently travelled to the OPEC member country are also being fixed on the spot market at a lower Worldscale rate, sources said.

More than 200 tankers, varying from Handysize (which can carry over 30,000 mt cargoes) to VLCCs (around 260,000 mt) have called at Venezuela over the past 12 months, according to data from S&P Global Platts trade flow software cFlow.

Venezuelan oil production plunged to just 550,000 b/d in May, down 70,000 b/d month on month, according to the latest S&P Global Platts survey of OPEC production.

But crude production has slumped below 300,000 b/d currently as the oil sector is being crippled by the US sanctions.

PDVSA's crude output fell as low as 284,000 b/d on June 13, with indications it would continue to fall due to the closure of hundreds of wells and the saturation of storage inventories, according to company technical reports reviewed by Platts.