According to foreign media reports, the Indonesian government is publicly auctioning a very large crude carrier (VLCC) sanctioned by the United States and its cargo of crude oil, with a starting price of no less than $70 million.
This tanker, named “Arman 114”, flies the Iranian flag and was lawfully seized by Indonesian authorities in 2023 for allegedly leaking oil while transferring crude to another tanker at sea.
According to official documents and statements released by the Indonesian Attorney General’s Office (AGO), the starting price for this tanker, built in 1997, includes the 167,000 tons of light crude oil on board. While Indonesian officials did not disclose the specific origin of the crude oil, shipping data from vessel tracking agencies Kpler and Vortexa indicate that the ship had loaded Iranian crude before its seizure.
Indonesia’s move is particularly notable amidst international discussions on how to handle sanctioned aging vessels. These vessels often belong to the growing “shadow fleet,” responsible for transporting oil from countries like Iran, Russia, and Venezuela to global buyers. In recent years, increased pressure from Western countries on Russian and Iranian oil exports has forced some major Asian buyers to halt trade with these nations.
According to a report by BRS Shipbrokers, about 80% of the approximately 1,140 “shadow fleet” tankers globally have been subjected to international sanctions. With the US, EU, and UK successively introducing new sanctions, this proportion may rise further. The increase in sanctioned vessels means that, although the flow of sensitive crude remains stable, more ships are now competing for the same cargo.
Meanwhile, legitimate shipbreaking yards and shipbrokers are generally cautious about acquiring sanctioned vessels for scrapping due to fears of secondary sanctions. However, industry data shows that this year, more US-sanctioned tankers have entered India—one of the world’s largest shipbreaking centers—through shadow traders and special payment channels.
Shipbrokers revealed that the transaction price for a 15-year-old second-hand VLCC is approximately $59 million, while the cost of a newbuild tanker is about $126 million. In contrast, the scrap value of an old tanker is only around $16 million. This significant price disparity becomes an incentive for some traders to take risks.
According to the requirements in the Indonesian government’s auction documents, the winning bidder must bear all maintenance, repair, and security costs for the tanker and must remove the vessel from the designated port within 30 days of the transaction. The documents do not explicitly specify how the winning bidder should dispose of the tanker and the crude oil on board.
