LONDON, May 27 – GMS, a company based in Dubai, has received approval from the U.S. government to dismantle four container ships that were under sanctions related to Iran. This decision might help the U.S. reduce the nu...
LONDON, May 27 – GMS, a company based in Dubai, has received approval from the U.S. government to dismantle four container ships that were under sanctions related to Iran. This decision might help the U.S. reduce the number of such vessels that operate in the shadows, according to Anil Sharma, the CEO of GMS.
There are hundreds of ships without insurance or adherence to environmental safety standards that have enabled Iran and Russia to bypass sanctions. These vessels also pose risks of oil spills and fuel leaks in busy shipping lanes.
By allowing the scrapping of these vessels, the new mechanism incentivizes their removal from operation, which can help lower environmental risks and better regulate the trade of sanctioned oil and goods.
GMS purchases ships and then recycles them in regulated yards, mostly in Asia. Sharma mentioned that the company had been in talks with U.S. officials for several months regarding the disposal of sanctioned ships.
“These ships are transitioning from a regulated environment to an unregulated one, which is causing major problems in trade,” Sharma stated.
GMS acquired the four ships from a seller, who is not under sanctions, after receiving permits from the U.S. Treasury. This marks GMS’s first deal with private sellers.
In 2019, GMS, which is incorporated in the U.S., purchased a bulk carrier flagged by North Korea, but that vessel was later sold at a public auction for recycling by the U.S. government.
Due to sanctions, GMS and similar companies usually can't engage with these vessels directly. Instead, these ships often change ownership through shell companies and name changes to hide their actual ownership and identity.
Sharma noted that U.S. authorities are not issuing “blanket licenses” and are requiring detailed oversight of financial transactions to ensure that funds do not reach sanctioned entities.
The U.S. Treasury has not yet responded to requests for comments on this matter.
The scrap value of such ships can reach tens of millions of dollars, depending on each vessel's type and weight.
According to GMS, the four container ships are now equipped with crews and insurance, and they are likely headed to India for recycling.
Sharma also mentioned that GMS is looking to target oil tankers that are under sanctions, but this aspect of the business will only be viable once the conflict between the U.S. and Israel with Iran comes to an end.
The ongoing conflict has left many ships stranded in the Gulf region, and it remains unclear how many commercial vessels linked to Iran have been affected by U.S. and Israeli operations, he said.
“The tanker market is currently very strong, so most operators do not have the urge to recycle just yet,” Sharma added.