UN Panel Asks Biggest Oil Traders for North Korea Information
(Bloomberg) -- A United Nations Security Council panel is asking the world’s biggest oil traders to disclose the actions they are taking to stop the sale of crude oil and petroleum products to North Korea in violation of sanctions.
The panel, established in response to restrictions against the country, sent letters to 24 of the biggest oil-trading and refining companies, asking them to outline what measures they have in place to ensure that oil cargoes “are not ultimately delivered” to tankers controlled by North Korea.
The traders have been given a month to respond, according to the letter sent on May 11 and seen by Bloomberg News. Hugh Griffiths, the UN panel’s coordinator, confirmed the contents of the communication in an interview.
The UN is targeting traders in the hope that they will insert terms in oil-trading contracts that will stop sanction violations. “We are hoping that this will become an industry norm and an industry standard,” Griffiths said.
The letter asks if oil contracts prevent ships with cargoes onboard from turning off their global positioning systems. In its most recent report, the UN panel said these are frequently switched off while transferring crude from tankers to North Korean vessels.
It also asks traders if contracts require the presentation of supporting documents that give evidence of full and complete delivery to the stated destination.
“We’d like to see a ripple effect emanating from the largest commodity traders so that this becomes an industry standard accepted by all, including the smaller brokers,” Griffiths said.
The questions in the letter align closely with initiatives already undertaken by oil trader Trafigura Group Ltd. after the UN identified it as unwittingly selling a cargo that was later transferred to a North Korean vessel.
“Trafigura is rolling out an enhanced set of requirements for deliveries made within a defined geographic area in north Asia,” Ben Luckock, the company’s co-head of market risk, said in a statement. “Following consultation with the United Nations, it has introduced new contractual language, with the key provisions requiring buyers to provide documentary proof of the cargo’s final discharge, including confirmation from the authority of the destination port.”
Trafigura is also stipulating that oil buyers require their vessels to not turn off their GPS.
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