US tanker seizure in extraterritorial waters hinges on Venezuela's terrorism designation: experts

The oil tanker the US seized near Venezuela was a unique test case for the Trump administration and could signal key considerations for future seizures, a pair of maritime experts said Dec. 19.

The US' seizure of the Skipper crude tanker on its way to Venezuela on Dec. 10 was unique, according to maritime lawyers Carmella O'Hanlon and David Tannenbaum, as it has the potential to enable broader enforcement actions against an estimated 150 tankers operating outside US sanctions licenses in Venezuelan waters, the lawyers said at an industry webinar.

"Absent the context, Skipper would just be a blip," Tannenbaum said. "But given everything [else], it is a major escalation," referring to a ramp up of US-applied pressure on Venezuelan President Nicolás Maduro by way of "designations, airstrikes, and seizures."

US President Donald Trump's administration preceded the tanker seizure by designating Venezuela's government as a foreign terrorist organization and, more recently, threatening a naval blockade, marking the most aggressive US action yet to oust Maduro.

The Skipper's seizure was facilitated by the ship's lack of proper flag registration after Guyana delisted it following US sanctions designations, creating a legal opening for extraterritorial enforcement, according to O'Hanlon and Tannenbaum.

The process to seize Skipper had been in the works since at least Nov. 26, O'Hanlon and Tannenbaum said.

Similar processes have been used to seize oil from Iran. By first designating the Venezuelan government as a foreign terrorist organization, the US is creating justification for civil forfeiture of these ships.

Enforcement expansion

The case demonstrates how the administration can leverage terrorism designations to seize ships outside US territorial waters, a capability that extends beyond traditional sanctions violations, according to the experts.

"Violations of sanctions can be ground for forfeiture, but terrorism gives grounds to seize outside of US territory," O'Hanlon said during the webinar.

The experts also said there is no "Venezuela-specific dark fleet," as these ships have been found, for example, to bring Iranian refined products to Venezuela, and then bring Venezuelan oil to China.

The Skipper was among 124 ships the US designated as Specially Designated Global Terrorists, given that they had previously carried Iranian oil, creating what Tannenbaum described as a "cross programmatic nexus" that strengthens the legal case for seizure.

"Of the tankers we see going in and out [of Venezuela], there are at least 150 tankers dealing in Venezuelan oil outside of OFAC license," the lawyers said.

Tannenbaum highlighted three key actor groups comprising Venezuela's shadow fleet that remain largely undesignated by the Office of Foreign Assets Control, including the Trident fleet that operates ships under Seychelles registration through Turkish management companies.

"Some vessels are afraid to leave Venezuela because of this," he said, referring to the heightened enforcement environment.

The experts identified common evasion tactics that could make ships vulnerable to future seizures, including prolonged spoofing of automatic identification systems, excessive loitering off West Africa and the Caribbean, and the use of single-ship companies registered in China, Turkey or Hong Kong.

Ships engaged in Venezuelan trade often spoof their locations for months, with sophisticated operations pretending to operate off the coast of Africa while actually loading in Venezuelan waters.

While the Trump administration has threatened a naval blockade of Venezuela, legal experts noted this would constitute an act of war requiring congressional approval. Instead, the administration appears focused on implementing what Tannenbaum called "sanctions in a clever way to implement a blockade" through expanded ship seizures and designations.

The enforcement escalation carries risks of retaliation, with Venezuela already providing military escorts for some departing ships and possessing an 800-mile coastline that would complicate any broader military intervention, according to the experts.

Current tanker activity outside of Venezuela

There were 17 vessels en route to Venezuela on Dec. 19, according to S&P Global Commodities at Sea tanker data. Of the 17, at least six are currently listed as non-compliant, sanctioned ships. These ships are or were last seen carrying naphtha, refined products, chemicals and Dalia, Boscan, Hamaca and Iranian crudes to Venezuela.

Fourteen out of 37 vessels leaving Venezuela are on a sanctioned list, according to CAS. Similarly, these ships are carrying Hamaca, Boscan and Merey-16 crude grades, with some last seen carrying naphtha and refined products.

Five of the ships seen leaving Venezuela -- the White Crane, Monique, Kiara M, Lattafa and H. Constance -- were recently sanctioned on Dec. 11, just after Skipper's seizure.

While shortly after the seizure, tanker traffic data from CAS showed a number of ships turning away from Venezuelan waters in the Caribbean Sea, the lawyers said there was not a drastic change to the number of ships coming or going from Venezuela's Jose Terminal, adding that they had seen long loading times at the port.