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 Tehran is seeking to make up for lost trade to Europe following the
lifting of EU sanctions imposed in 2011 and 2012, which deprived it
of a market that accounted for over a third of its exports and left
it relying completely on Asian buyers.
Iran has 55-60 oil tankers in its fleet, a senior Iranian government
official told Reuters. He declined to say how many were being used
to store unsold cargoes, but industry sources said 25-27 tankers
were parked in sea lanes close to terminals including Assaluyeh and
Kharg Island for this purpose.
Asked how many tankers were not seaworthy and needed to go to dry
docks for refits to meet international shipping standards, the
senior official said: "Around 20 large tankers ... need to be
modernized."
A further 11 Iranian tankers from the fleet were carrying oil to
Asian buyers on Tuesday, according to Reuters shipping data and a
source who tracks tanker movements. That was broadly in line with
the number consistently committed to Asian runs since sanctions were
lifted in January, putting more strain on the remaining available
fleet.
This means foreign ships are needed for a big export push to Europe
and elsewhere, said the industry sources, as Iran looks to meet its
target of reaching pre-sanctions sales levels this year. But many
owners, who are not short of business in a booming tanker market,
are unwilling to take Iranian cargoes.
The main reason is that some U.S. restrictions on Tehran remain in
place and prohibit any trade in dollars or the involvement of U.S.
firms including banks - a major hurdle for the oil and tanker
trades, which are priced in dollars.
Eight foreign tankers, carrying a total of around 8 million barrels
of oil, have shipped Iranian crude to European destinations since
sanctions were lifted in January, according to data from the
tanker-tracking source and ship brokers.
That equates to only around 10 days' worth of sales at the levels of
pre-2012, when European buyers were purchasing as much as 800,000
barrels per day (bpd) from the OPEC producer.
So far no Iranian tankers have made deliveries to Europe, according
to data from the tanker-tracking source.
'PLENTY OF OTHER BUSINESS'
Paddy Rodgers, chief executive of leading international oil tanker
company Euronav <EUAV.BR>, said at present there was "no great
urgency to do business in Iran".
"There is not a premium to do business in Iran and there is plenty
of other business - the markets are busy, rates are good. So there
is no stress on wanting to do it," he told Reuters.
"I don't really want to set up a euro bank account in Dubai in order
to trade with Iran - that would crazy."
Michele White, general counsel with INTERTANKO, an association which
represents the majority of the world's tanker fleet, said: "We have
witnessed a reluctance by our members generally to return to Iranian
trade given the prohibition on use of the U.S. financial system –
essentially no U.S. dollars."
The senior Iranian government official, who declined to be named due
to the sensitivity of the matter, acknowledged his country was
finding it difficult to hire foreign tankers.
"We are working on the problems. There are various issues involved,
financial, banking and even insurance. It has improved a little bit
since the lifting of sanctions but we still face serious problems."
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Asked if this and the need to modernize some of the domestic fleet
was holding back exports, he said: "Of course it does."
The strain on Iran's fleet is partly because it has struggled to
gain access to land storage sites around the world, as sanctions
shut it out of the international financial network, making it more
reliant on floating storage than many oil-producing rivals including
Saudi Arabia.
The problem has been compounded by a global oversupply of oil, and
the industry sources estimated Iranian tankers were storing 45-50
million barrels of unsold crude.
POLITICAL RISK
Two other sources with other leading oil tanker operators echoed the
concerns of Rodgers and White, and said they were not doing Iran
deals at the moment.
One of the two sources said with a new U.S. president to take office
in January, tanker owners were unsure whether there could be any
change to the nuclear deal Washington and other world powers agreed
with Iran which led to the end of sanctions.
"It does not appeal to them to take on the risk and the uncertainty
of the U.S. connection and future U.S. political policy that would
come into play," said the source, who declined to be named, citing
sensitivity over potential Iranian trade.
Gavin Simmonds, of the UK Chamber of Shipping trade association,
said of the U.S. presidential timing and the global oil oversupply:
"Iran is rejoining the market at the worst possible time."
Before 2012 Iran exported around 2 million bpd, with more than half
going to Asia, mainly China, South Korea, India and Japan. Tehran
has been banned from selling oil to the United States for decades.
The tanker industry has cited other problems posed by Iranian
business. Ship insurers have plugged a shortfall in cover that had
been caused by U.S. reinsurers being restrained by Washington's
sanctions, although tanker owners say it comes with risks and it
could also be withdrawn if, for instance, wider sanctions are
reimposed.
"Shipping insurance is still a problem. We see many buyers in the
market still avoid buying from Iran," Fereidun Fesharaki, founder of
energy consultancy FGE, wrote in a note.
Tanker industry sources also pointed to reports that Iran's arch
rival Saudi Arabia had banned Iranian-flagged ships from entering
its waters with. Separate reports indicated Saudi ally Bahrain had
imposed a ban on any vessels that visited Iran as one of its last
three port calls.
"Any spread of the Bahrain-style ban on foreign ships that have
recently called Iran can only fuel this hesitancy for owners who
trade in the Middle East region," said INTERTANKO's White.
(Additional reporting by Libby George; Editing by Pravin Char)
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