Iran Sanctions – STS transfer involving Iranian Crude Oil

Members will be aware of the ongoing sanctions regarding export of Iranian crude oil from previous News Alerts (click here and here). Whilst a temporary suspension of certain sanctions (currently until 30 June 2015) is in place, including for the export of Iranian crude oil, the suspension in relation to crude only applies to the carriage from Iran to US waiver countries outside the EU (currently China, India, South Korea, Taiwan and Turkey).

In recent weeks it has become apparent that sophisticated attempts are being made to dupe shipowners into transporting Iranian crude to non US waiver countries by loading it at Khor Fakkan in the UAE.  Shippers appear to be transporting the sanctioned cargo from Iran to Khor Fakkan using feeder ships and then, using falsified cargo documentation, by way of STS transfer to innocent vessels at Khor Fakkan. The documentation describes the cargo as having an origin other than Iran (so far Iraqi ports have been named) and may also misdescribe the shippers. Leaving aside that shipment of such cargoes is likely to lead to an absence of insurance cover, carriage is also likely to result in serious consequences for Members under the applicable sanctions regime.

In the circumstances, Members considering fixing to load crude oil cargoes by way of STS transfer in Khor Fakkan or elsewhere in the Persian Gulf, and those who are ordered to do so under an existing charter, are urged to investigate the origin of the cargo well in advance and certainly before loading. Investigations should include, but not be limited to, checking the previous trading pattern of the vessel that is providing the cargo by way of STS transfer. Of course, should Members be ordered to load a crude cargo by way of STS transfer in the Persian Gulf under existing contractual arrangements, Members’ options could be limited by the absence of specific contractual provisions and so Members are reminded that BIMCO, working together with the International Group of P&I Clubs, has drafted a sanctions clause for time charterparties (click here for the BIMCO sanctions clause).