Iran is Dodging Around Sanctions to Sell Thousands of Tons of Fuel Oil

By Rania El Gamal

DUBAI, Feb 3 (Reuters) – Iran is sidestepping Western sanctions and managing to promote lots of of 1000’s of tonnes of gas oil each month by means of corporations based mostly within the U.S.-allied United Arab Emirates, buying and selling sources advised Reuters.

The U.S. and EU sanctions that got here into power in 2012 prohibit the import, buy and transport of Iranian petroleum merchandise to stress Tehran to halt its disputed nuclear program. Washington has additionally pressed its allies all over the world to clamp down on the transport of Iranian oil merchandise.

But Tehran has been utilizing revolutionary strategies to bypass the restrictions, a number of Middle East-based buying and selling sources mentioned.

They embrace tankers switching off their monitoring programs, ship-to-ship transfers, discharging and loading at distant ports, mixing Iranian merchandise with fuels from one other supply to change the cargo’s bodily specification and promoting them with Iraqi-origin paperwork, the sources mentioned.

The Iranian gas oil is principally provided from the UAE port and bunkering hub of Fujairah, by means of buying and selling corporations performing as middlemen for consumers who might not know the cargo is from Iran, the sources mentioned.

The middlemen are small corporations – who purchase the merchandise at below-market costs, for a much bigger revenue margin – reasonably than bigger merchants who wouldn’t run the danger of falling foul of U.S. authorities and threatening their worldwide operations.

Requests for remark from officers on the state-owned National Iranian Oil Co. and the UAE’s Fujairah port weren’t instantly answered.

Iran is eager for any further revenue as sanctions have halved its crude exports – its predominant income – to simply over 1 million barrels per day, dealing a significant blow to its financial system.

Along with low oil costs, this has prompted Tehran to sweeten the phrases it gives on oil growth contracts to attract the curiosity of international buyers.

SURPLUS

Iran makes use of gas oil for electrical energy era and to energy ships, however in contrast to different extra refined merchandise resembling diesel or gasoline, it has a surplus to export.

The buying and selling sources estimated Iranian gas oil exports at round 200,000-400,000 tonnes per thirty days in latest months. That compares with 600-650,000 tonnes in 2011, earlier than sanctions.

Reuters knowledge corroborates the estimate of the sources, and in addition reveals sharp fluctuations in gas oil flows, which merchants mentioned was probably attributable to stockpiling by Iran late final yr to keep away from winter shortages.

Fuel oil exports from the OPEC member have been 200,000 tonnes in October, down from 400,000 tonnes in September and final yr’s excessive of 540,000 tonnes in June, the information reveals.

The sanctions goal the financing and transport insurance coverage wanted to purchase and transport Iranian cargoes, making it tougher for would-be clients to commerce with Iran.

But one buying and selling supply mentioned Iranian gas oil was nonetheless flowing to the UAE: “Iranian fuel oil has been in the market in the UAE and everybody knows about it.”

“People still get fuel oil and gasoil from Iran and ship gasoline to Iran,” the supply added, estimating month-to-month exports of round 80,000-100,000 tons of Iranian high-sulfur gasoil.

U.S. Treasury spokeswoman Hagar Chemali mentioned: “We do not comment on specific cases, but investigate and pursue sanctions evasion vigorously, including through work with foreign authorities.”

“We work closely with the Emirati authorities to uphold and enforce Iran sanctions and we convey our concerns when we have them,” she mentioned.

The United States blacklisted some corporations in 2012 attributable to their enterprise hyperlinks with Iran, together with UAE-based Fal Oil and Singapore’s Kuo-Oil, as soon as lifters of Iranian gas oil.

Last August, they blacklisted two corporations and three individuals, together with UAE-based agency Faylaca Petroleum, saying they labored on behalf of Iran to market crude oil and obscure the origins of Iranian fuel condensate.

DENSITY

An evaluation by Thomson Reuters Oil Research and Forecasts signifies Iranian gas oil exports had ceased for 2-3 months, attributable to elevated home demand and stockpiling, however resumed in January.

February gas oil flows from the UAE to Asia are pegged at 480,000 tonnes as a direct results of increased Iranian inflows into the Fujairah hub, in response to the evaluation. That determine is double November’s volumes and well-above final yr’s month-to-month common of 358,000 tonnes.

Last month, transport insurer West of England warned that oil cargoes loaded ship-to-ship on the Khor Fakkan port might comprise Iranian crude disguised as Iraqi barrels.

But one other Middle East-based dealer mentioned it was exhausting to idiot refineries and move Iranian crude oil off as Iraqi on this approach with out mixing. “It is easier to play with the oil products specifications,” the dealer mentioned, including he has been approached earlier than by a Gulf-based oil buying and selling firm making an attempt to move a gas oil cargo as of Iraqi origin.

Close examination of the specification of the cargo confirmed it was most definitely 280-cst gas oil exported from Iran’s Bandar Mahshahr port, the dealer mentioned.

An Iraqi origin certificates of high quality for a cargo, obtained by Reuters, confirmed the density of the 280-cst viscosity gas oil to be 0.964.6 kg a liter – a density that merchants say is in step with Iranian merchandise, reasonably than Iraqi.

The paperwork additionally said the loading of the cargo was accomplished on May 19, from Iraq’s Khor al-Zubair port. But AIS Live ship monitoring knowledge confirmed the ship – referred to as PAGAS – was on the port of Bandar Imam Khomeini, often known as Bandar Mahshahr, close to Iran’s largest refinery Abadan, on that very same day.

On June 6 it was anchored at Fujairah, the monitoring knowledge confirmed.

Reuters contacted the corporate that chartered the tanker, in response to the transport paperwork, however it denied any hyperlinks to PAGAS.

Another indication that so-called Iraqi origin gas oil could also be Iranian is a budget value being provided, mentioned the primary buying and selling supply.

“If you deal with fuel oil and bunker business in the UAE, most likely you have to touch Iranian fuel oil because otherwise the economics just don’t work.” (Additional reporting by Parisa Hafezi in Ankara and Anna Yukhananov in Washington; Editing by Pravin Char)