U.S. sanctions on COSCO hit Teekay's Yamal LNG tanker JV

[September 30, 2019]  LONDON (Reuters) - U.S. sanctions on two units of Chinese shipper COSCO hit the liquefied natural gas (LNG) tanker industry on Monday as U.S.-listed Teekay LNG <TGP.N> said its joint venture in Russia had been "blocked" for its ties to COSCO.

A China Ocean Shipping Company (COSCO) container ship is seen at San Antonio port in Chile August 6, 2019. REUTERS/Rodrigo Garrido/File Photo

The United States imposed sanctions on the two units - COSCO Shipping Tanker (Dalian) Co, Ltd and its subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co, Ltd - for allegedly carrying Iranian crude oil.

Teekay LNG said on Monday its 50-50 Yamal LNG Joint Venture had been deemed a "blocked person" under the sanctions as its partner China LNG Shipping (Holding) Limited (CLNG) is 50% owned by COSCO Dalian.

"As a result of CLNG’s 50% interest, the Yamal LNG Joint Venture also currently qualifies as a "Blocked Person" under OFAC rules," Teekay said in a statement, referring to the Executive Office of Foreign Assets Control (OFAC) Order.

The venture owns four operational Arc7 ice-breaking tankers - the Eduard Toll, Rudolf Samoylovich, Nikolay Yevgenov and Vladimir Voronin - which carry gas from the massive Yamal LNG production facility in the Russian Arctic.

Yamal LNG is operated by Russian independent gas producer Novatek <NVTK.MM>.

A fifth Teekay Arc7 tanker, the Georgiy Ushakov, is heading to Yamal, having been built and tested over the summer around South Korea's Daewoo Shipbuilding and Marine Engineering (DSME) <042660.KS> shipyard. A sixth, Yakov Gakkel, is undergoing sea trials.

A Novatek spokeswoman declined to comment immediately.

Due to the Arctic conditions, the ice-breaking ARC7s are critical for carrying LNG produced at Yamal westwards to Europe and eastwards to Asia.

There are currently 14 such tankers in operation with Dynagas <DLNG.N>, Sovcomflot and Mitsui OSK Lines <9104.T> owning the others.

(Reporting by Sabina Zawadzki and Ekaterina Kravtsova; additional reporting by Vladimir Soldatkin in Moscow; editing by Jason Neely)

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