Suspected Iranian Oil Caught in Sanctions Trap
20 June 2019 - 04:11AM
Dow Jones News
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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