Malaysia Seizes Two Suspected "Shadow Fleet" Ships Carrying $130M worth Oil

Malaysia has seized two tankers suspected of operating as part of a “shadow fleet,” detaining vessels carrying crude oil valued at more than 512 million ringgit ($129.9 million) during an operation in Malaysian waters off Penang.

The Malaysian Maritime Law Enforcement Agency (MMEA) reported that the latest seizure took place 24 nautical miles west of Mukah Head, where patrol officers detained two tankers suspected of “illegally transshipping oil.” The vessels were found anchored side-by-side, a configuration commonly associated with ship-to-ship (STS) oil transfers, Reuters reported Sunday.

The MMEA did not disclose the origin of the seized crude. However, the waters off Malaysia are frequently used for STS operations involving oil transiting from Russia and Iran, with Venezuelan cargoes previously detected in the area. These transfers are used to obscure the origin of crude oil while at sea.

Captain Muhammad Suffi Mohd Ramli said the operation followed a complaint received at around 1:00 a.m. local time reporting suspected “illegal” activities. He said the positioning of the vessels raised suspicions of unauthorized STS operations.

In a separate disclosure, Malaysian authorities said the two seized tankers, together carrying cargo valued at 718 million ringgit ($275 million), had 53 crew members on board from China, Burma, Iran, Pakistan, and India. The captains of both vessels were arrested and handed over to Penang state maritime investigators.

The vessels are being investigated for unauthorized anchorage, punishable by a fine of about $30,000, and for illegal ship-to-ship transfers, which carry fines of up to $60,000 per vessel, according to the agency. Malaysian authorities have previously warned that shell companies operating such vessels often abandon them during legal proceedings, leaving oil-laden tankers subject to confiscation and sale by the state.

The seizure follows Malaysia’s announcement last year that it would step up enforcement against unregulated STS oil transfers, as Western countries intensify scrutiny of so-called shadow fleets moving sanctioned crude.