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Thursday, March 28, 2013

Chinese tanker in Iranian Port ~ first after EU sanctions


In early 2012, the Council of the European Union raised  its concerns about the growth and nature of Iran's nuclear programme. As a result, the Council announced that it would levy an embargo on Iranian oil exports. Back in July 2012 the European Union [EU} imposed sanctions that prevented all European organisations from dealing with Iranian institutions. This meant that around 95% of the world’s tanker fleet had  to forfeit insurance if they traded Iranian oil, as most maritime insurers are based in Europe. Sanctions or restrictive measures (the two terms are used interchangeably) have been frequently imposed by the EU in recent years, either on an autonomous EU basis or implementing binding Resolutions of the Security Council of the United Nations. Sanctions are an instrument of a diplomatic or economic nature which seek to bring about a change in activities or policies such as violations of international law or human rights, or policies that do not respect the rule of law or democratic principles. All 27 EU states signed up for the sanctions. In addition to the oil embargo, the EU also decided to freeze the assets of the Iranian central bank, arguing that the aim was to choke off funding for the nuclear programme.

The new sanctions put restrictions on foreign trade, financial services, energy sectors and technologies and includes a ban on the provision of insurance and reinsurance by EU insurers to the State of Iran and Iranian owned companies. Iran on its part declared its intentions to close the Strait of Hormuz should the embargo be enacted. The embargo decision by  EU foreign ministers at a meeting in Brussels raised the stakes dramatically in the war of wits between Iran and the west. The EU decided no further oil contracts could be struck between the member states and Iran while existing oil delivery deals would be allowed to run until July. It impacted many other non EU Nations as well.  The oil embargo represented a leap in the sanctions regime against Iran, following four earlier rounds of escalating penalties. That also brought to fore the apprehension of rocketing oil prices at a time when there was extreme economic difficulty around the globe. 

Now months after the industry is agog with  report of the first confirmed visit to an Iranian port by a Chinese-owned crude oil carrier since the ban. A Chinese supertanker able to haul 2 million barrels of crude sent a signal from Iran’s largest export terminal in what may be the first visit of its kind since a European ban on insuring shipments in July. The Yuan Yang Hu, belonging to state-owned China Ocean Shipping (Group) Co., the country’s biggest shipping company, was at Kharg Island on March 21, according to vessel-tracking data from IHS Fairplay, a Redhill, England-based research company. The ship has since left thePersian Gulf, according to a signal today. The reason behind the Yuan Yang Hu’s visit to Iran has not yet been revealed officially.


Reports further suggest that Skuld, the Oslo-based insurance company responsible for providing cover to the Yuan Yang Hu, the tanker in question which happens to be owned by state-run China Ocean Shipping Co., has confirmed that the insurance protection will be automatically invalidated if the ship takes any Iranian oil onboard. “We insure ships on a yearly basis and do not usually know what particular activity a ship is engaged in at any one time,” Skuld said in its statement. “In general we only become aware of a particular ship’s location and cargo if there is an incident giving rise to a claim. An owner is not obliged to inform Skuld about the trade he is conducting with the vessel.” “Our insurance conditions contain a provision that cover is automatically excluded if providing cover or paying a claim may expose Skuld to the risk of sanctions,” Skuld said. “While we cannot comment on a particular member, we are very much aware of the EU restrictions on the provision of insurance,” Skuld said. “Compliance is of the utmost importance to us. We would point out that the operation of the exclusion is automatic – the exclusion will apply without us being required to give notice to owners.”

China has always been clear that it will not be subjected to the West’s Sanctions against Iran, with Foreign Ministry Spokesman Hong Lei, stating that, “China maintains normal and transparent energy cooperation with Iran in accordance with its own energy requirements. We obviously oppose some country imposing sanctions against another country according to their own domestic laws.” However, even Peoples Republic cannot transport oil without insurance. There was some speculation that they might decide to offer their own tankers some form of insurance cover, but that never occurred. There was speculation before and after the ban that the Chinese government would directly insure the cargoes or that the nation’s owners would seek alternative insurance.

With regards – S. Sampathkumar.
28th Mar 2013.

News source : http://oilprice.com/ and www.blomberg.net
Vessel photo courtesy  : www.presstv.ir

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