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Thursday, December 8, 2022

Iran-Venezuela Oil Tanker Deal Hit by Sanctions Snags

Maritime Activity Reports, Inc.

January 18, 2016

An agreement to build oil tankers in Iran for Venezuela has been left in limbo years after it was announced as Western sanctions plus disagreements over payments and delivery terms took their toll, sources familiar with the matter say.
The deal was heralded in 2006 with much fanfare by Tehran and the socialist government of then-president Hugo Chavez to build four oil tankers in Iran on behalf of Venezuela's state oil company PDVSA as part of a wider global order for 42 ships.
According to sources and backed up by shipping data, the Iranian order was never completed.
A former adviser to PDVSA's maritime subsidiary involved in the deal said the imposition of tougher sanctions in 2012, including banking, insurance and shipping restrictions, weighed on the deal, making the procurement of insurance tough.
Finding classification cover - which verifies safety and environmental standards for ships and is vital for securing insurance as well as port access - became virtually impossible.
"We faced problems related to sanctions imposed by the United States and Europe against Iran that were extremely difficult to solve. We went to several classification societies and all of them said the vessel couldn't be classified," the former adviser said.
"To have the tanker insured at an affordable rate was almost impossible and in all the paperwork we tried to do we were exposing ourselves to sanctions."
Iranian and PDVSA officials could not be reached for comment. PDVSA was hit by U.S. sanctions in 2011 after it delivered at least two refined products cargoes to Iran.
Despite a nuclear deal between Iran and world powers that led to the removal on Saturday of various sanctions such as oil, shipping and banking, a resumption of the tanker pact is unlikely, sources say, due to a lack of interest by cash-strapped PDVSA.
Data collated by UK-headquartered maritime technology company Pole Star showed three of the four tankers - aframax-class vessels each able to carry up to 700,000 barrels of oil - were canceled.
Only one vessel was built and has been renamed three times, most recently called Arita.
Ship-tracking data shows the now Iranian-flagged ship anchored close to the port of Bushehr since Iran announced it finished in late 2014.
Shipping sources confirmed the vessel never set sail amid problems related to previous sanctions coupled with disagreements between PDVSA and Iran's shipyard Sadra over payments and delivery terms.
Shipping databases listed its owner as Sorena International Shipping Corp operating from an industrial zone in Oman, with its ultimate beneficial owner listed as unknown. The company could not be reached for comment.
One ship industry source said it was likely that Iran was using the vessel to store oil, helping in efforts to hold unsold stocks of crude and derivative product condensate at sea.
"Based on the vessel's movements, it is very feasible this vessel has become part of Iran's floating storage fleet and has helped park unsold stocks for now," the source said.
Oil held by Iran in floating storage is estimated by shipping sources to be over 40 million barrels as the country struggles with offloading supplies due to a global glut. Sources say as many as 22 to 26 tankers are holding oil, which is expected to hit world markets.

(By Jonathan Saul and Marianna Parraga)

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