Sanctions News 13 Jan, 2015

Sanctions - Illicit Exports of Iranian Oil

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The Managers have been made aware of attempts in recent months to export crude oil originating from Iran in breach of applicable sanctions by means of ship to ship (STS) transfers at Khor Fakkan in the UAE.

It appears that such oil may routinely be described as being of Iraqi origin and as having been loaded on board the transferring vessel at Basra some time before the proposed STS operation. However, any such documentation should not be taken at face value.  On recent occasions the supplying vessels loaded the cargo in Iran before shuttling across the Straits of Hormuz to supply vessels with oil - ostensibly from Iraq - destined for countries that do not benefit from a waiver under applicable US sanctions legislation.

The Club cannot provide insurance to vessels which load Iranian cargo in such circumstances and cover will cease in its entirety if such cargo is loaded. Members should also be aware that the transport of Iranian oil to states which do not benefit from a waiver under US law may trigger enforcement action against the vessel, its owners and related parties by the US authorities.

There is evidence of a sophisticated smuggling operation and those responsible may go to considerable lengths to disguise the true origin of the cargo. Cargo documentation is likely to appear credible and there may be no evidence of any designated parties being involved.  Members are therefore advised to exercise extreme caution when engaging in STS operations in the Arabian Gulf.  In particular it is recommended that Members check with port agents to ensure that vessels providing cargo by means of an STS transfer in the region loaded the cargo at the port stated in the cargo documentation before any cargo is received. It is also advisable to ensure that charter parties contain an appropriate sanctions clause.

Members should contact the Managers if they have any questions or concerns about a proposed cargo.