Zombie oil supertanker in China points to Iran trade workarounds
[HONG KONG] After buckling under pressure from Beijing and Washington, the clandestine supply chain that carries Iranian crude to China is finding new workarounds.
A tanker identifying itself as Global discharged about two million barrels of Iranian oil at a port managed by a Chinese provincial government in late April, ship-tracking data show. However, the vessel was actually a very large crude carrier called Gather View that had been sanctioned by the US and took over the identity of a previously scrapped ship to evade a crackdown on the trade.
It's the first time a so-called zombie ship was observed entering a government-run port in Shandong since the province, home to the world's biggest buyers of Iranian crude, issued a directive forbidding sanctioned tankers in January. The move highlights the lengths Tehran and the teapots – independent Chinese refiners often working on extremely thin margins – are going to keep the trade alive.
The sale of Iranian crude to China is crucial to Tehran and a lifeline for Shandong's private processors. In the past, it's been facilitated by ship-to-ship transfers in the waters off Malaysia to avoid scrutiny and mask the origins of the cargoes.
A crackdown by the US – through successive rounds of sanctions – and China since January has now snarled the supply chain. Traders have since rushed to find privately run berths in China to receive sensitive cargoes, as well as sourcing the smaller tankers they are able to accept.
The delivery of two million barrels on a sanctioned VLCC to a government-run port goes against that trend. It's a risky gambit: if discovered by authorities, the entire cargo worth about $120 million at the time could have been impounded. Furthermore, the port could have hit by Washington's secondary sanctions – as happened in March to a terminal in southern China that facilitated the trade.
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'Iran needs to be creative because the pace for them to find new tankers cannot really match the pace of US sanctions,' said Muyu Xu, senior crude oil analyst at analytics firm Kpler in Singapore. 'So that's why we're seeing them come up with this tactic.'
Zombie ships, where a vessel signals itself as an already scrapped tanker, are increasingly being used to avoid sanctions, as law enforcement officials become more familiar with the usual tactics used by the dark fleet to deliver sensitive cargoes. At least four such vessels have featured in the Venezuelan oil trade, while late last year one was observed discharging at two ports in China.
The Gather View – identifying as Global – called at a berth in Dongjiakou belonging to Qingdao Port, which in turn is part of Shandong Port Group, on Apr 25, according to data from Kpler and Bloomberg. It appears to have carried out a similar run in March.
Shandong Port Group did not respond to an email seeking comment. There's no clear evidence of willful wrongdoing in port inspection procedures but 'there may be some loophole in terms of scrutiny', said Kpler's Xu.
The Gather View was sanctioned by the Treasury Department in December under its former name, MS Angia, for being involved in the Iranian oil trade. It's flying the flag of San Marino, took its cargo from another tanker owned by the National Iranian Oil Company through an at-sea transfer near Malaysia, and has since returned to that area, data show.
The original Global – a floating storage unit for crude – was sent to the breakers in Bangladesh in late 2021. That vessel was not sanctioned by any government.
Smaller cargoes on sanctioned tankers are still reaching China's private ports, including a terminal at Dongying recently spun off from Shandong Port Group that has become a go-to spot for sensitive shipments. However, those workarounds aren't as cost-efficient as those done through official ports that can receive larger VLCCs. BLOOMBERG
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