Ghost Fleet Update: OFAC Designates Additional Vessels, Companies

On December 1, 2023, the Office of Foreign Assets Control (“OFAC”) imposed sanctions on three entities and identified three vessels as blocked property that used G7 Price Cap Coalition services while carrying Russian crude oil above the Coalition-agreed price cap. These sanctions build on Treasury’s previous actions, most notably including letters recently sent to nearly 100 vessels concerning potential sanctions violations, which we discussed on November 20, 2023. This new action builds on OFAC’s commitment, alongside its Coalition partners, to responsibly reduce oil revenues that the Russian government uses to fund its war against Ukraine. An OFAC spokesperson stated that “[e]nforcement of the price cap on Russian oil is a top priority for the United States and our Coalition partners” and “[b]y targeting these companies and their ships, we are upholding the dual goals of the price cap by restricting Russia’s profits from oil while promoting stable global energy markets.”

The crude oil price cap took effect in December 2022 with a cap on Russian crude oil at $60 per barrel. The vessels NS Champion, Viktor Bakaev, and HS Atlantica, according to OFAC, carried Russian Urals crude oil priced above $70 per barrel after the crude oil price cap took effect and used U.S.-person services while transporting said oil. The following three entities were reported as the owners of the respective vessels by OFAC:

• UAE-based Sterling Shipping Incorporated is the registered owner of the NS Champion.
• UAE-based Streymoy Shipping Limited is the registered owner of the Viktor Bakaev.
• Liberia-based HS Atlantica Limited is the registered owner of the HS Atlantica.

All three entities were designated pursuant to Executive Order 14024 for operating or having operated in the marine sector of the Russian Federation economy. OFAC also identified the NS Champion, Viktor Bakaev, and HS Atlantica as property in which Sterling Shipping Incorporated, Streymoy Shipping Limited, and HS Atlantica Limited, respectively, have an interest.

As a result of the previously mentioned OFAC letters and increased enforcement, oil tanker owners in Greece, one of the world’s most powerful ship owning nations, have dramatically slowed tanker shipments involving Russia. Reports indicate that the number of Greek-owned tankers operating to or from Russia last month was nearly 25% lower than the last. This trend builds on a 60% decrease in tankers going to Russia since June 2023.

As a result of this action, all property and interests in property of the persons above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. All transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a license issued by OFAC or if they are found otherwise exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

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