By Sarah McFarlane and Benoit Faucon 

Italy's oil giant Eni SpA has rejected a cargo of suspected Iranian crude, as energy companies grapple with sophisticated techniques used by Iran to evade U.S. sanctions.

The cargo, which was intended for the Milazzo refinery in Sicily, remains on board a Liberia-flagged vessel named White Moon, after Eni said the specifications didn't match those of its contract for Iraqi oil. The ship's documents show that the cargo, which Eni bought from the trading arm of Nigeria's Oando PLC, was Iraqi, an Eni spokesman said.

Instead, it had properties which were consistent with Iranian crude, a person familiar with the matter said.

The Eni spokesman said the company "is not aware if, or has evidence of, a precise geographical origin different from that indicated on the documents of origin and load."

Washington tightened its sanctions on Tehran at the start of May with the expiration of waivers that had allowed some countries, including Italy, to purchase limited volumes of Iranian oil. Eni already had voluntarily stopped buying Iranian crude in October.

The incident highlights the challenges energy companies face in meeting Washington's stricter due-diligence guidelines for potentially deceptive shipping practices in maritime trade. Eni recently has faced questions about the oil in question at an Italian Senate hearing, the company spokesman said.

Oando Trading's general manager of corporate development Effanga Effanga, said "at the point of loading there was a joint inspection between Eni and Oando and it met contract specifications and at the point of discharge we found out it was off-spec due to the sulfur content." Mr. Effanga declined to specify whether that inspection took place in the Persian Gulf or elsewhere.

Mr. Effanga said Oando has now rejected the cargo and sent it back to its own supplier but declined to name that company. The White Moon, according to ship-tracking websites, was sailing away from the coast of Sicily on Wednesday.

Eni's head of oil trading, Alessandro Des Dorides, who oversaw the deal for the cargo, was fired three weeks ago, though the company says it had to do with an unrelated matter.

The dismissal was "in respect to a transaction involving breaches of internal rules and fiduciary duties related to a transaction on high density polyethylene prior to the current White Moon issue coming under scrutiny."

Mr. Des Dorides couldn't be reached for comment.

Iran was suspected during sanctions earlier this decade of selling sanctioned crude by using tactics such as disguising oil's origins and getting tankers to turn off location-tracking devices.

In March, the U.S. Treasury Department told companies how they should identify red flags for potential sanctions-evasion behavior in their supply chains. These include ship to ship transfers -- by which cargo is moved from one ship to another at sea -- and any sign of manipulation to a vessel's radio-signal tracking system in suspicious waters.

The White Moon's cargo appears to have taken a circuitous route into the oil supply chain. At least some of the oil White Moon transported came from a ship-to-ship transfer with a Liberia-flagged vessel named New Prosperity in the Persian Gulf in early May, data from oil analytics firm Vortexa showed. Data from shipping tracker Marine Traffic also shows the New Prosperity emptied most of its cargo around May 6 while the White Moon, which stood next to her, filled up.

Before unloading oil to the White Moon, New Prosperity received its cargo from a ship-to-ship transfer with a Vietnam-flagged vessel named Abyss. Ship-tracking data showed Abyss wasn't emitting a radio signal for its location between April 24 and May 3.

A spokesman for Zodiac Maritime, the operator of White Moon, said it "independently carried out customary sanctions compliance checks on the owner of the previous vessel and its journey history before the [ship-to-ship] transfer took place. Eni also gave us express written assurance that its cargo was not from a sanctioned territory, including Iran."

The owner of Abyss, PetroVietnam Transportation Corp., didn't respond to requests for comment.

The owner of New Prosperity, Greece-based New Shipping Ltd., confirmed the initial transfer of oil from Abyss to its ship, which it said was done in Iraqi waters with Iraqi crude, and that the cargo was then transferred to White Moon.

"Our charter strictly prohibits loading any Iranian origin oil and no STS operation is allowed with any Iranian related vessel," New Shipping said in an emailed statement.

Ships aren't penalized for not using radio-signal tracking systems, but shipping guidelines advise ships to use tracking systems to avoid collisions between vessels or located them if they need rescuing.

--Eric Sylvers contributed to this article.

 

(END) Dow Jones Newswires

June 19, 2019 13:56 ET (17:56 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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