A Suezmax tanker with Western insurance cover visited two Iranian oil ports recently to load condensate cargo in a bid to take advantage of the easing of economic sanctions against Tehran, although concerns and risks over payment of claims remain, market sources said this week.
The Alexandra 1, which is run by Transland Bulk Carriers Limited, called at Iran’s Assaluyeh oil port on July 25 in unladen status and left for the Iranian port of Kharg Island on July 29 after being loaded, according to market sources and Platts ship-tracking tool cFlow.
The vessel’s trail also indicated it had called at Jebel Ali on August 2, where it is believed to have discharged its cargo.
The carrying of Iranian crude by the Alexandra 1 is considered to be a significant development since the vessel’s protection and indemnity (P&I) cover is provided by the UK-based West of England P&I Club.
It is a major break from the recent past when ships covered by Western P&I clubs were barred from lifting oil cargoes from Iran due to the enforcement of the EU and US sanctions.
West of England Insurance Services Director Tony Paulson confirmed to Platts on Monday that the company has an entry for the Alexandra I in its registers but said it is “subject always to our policy terms and conditions.”
He declined to divulge whether or not the voyages to Iranian ports are eligible for insurance cover under the terms and conditions. “We do not comment on any vessel’s position or trade,” he said.
Paulson added that the insurance cover provided by a P&I club member is subject to the various provisions of international sanctions as determined from time to time.
“We comply with the provisions of the sanctions,” he said.
A Transland Bulk Carriers official said the Alexandra 1 is managed by the company but it declined to comment on the vessel’s itinerary. The company is yet to reply to e-mail queries on the matter.
An official at the ship’s technical manager, International Tankers Management, said the company is undertaking the technical management of the ship but declined to comment on its voyage to Assaluyeh.
INSURANCE CLAIM PAYMENTS A CONCERN
In November, China, France, Germany, Russia, the UK and the US, also called the P5+1 group, reached an agreement with Iran on its nuclear program and published a Joint Plan of Action, or the JPoA, which included a temporary suspension of transportation and insurance prohibitions from January for a period of six months.
Recently the suspension was extended by another four months but insurance companies are worried that the deferment may be withdrawn anytime in case the negotiations between Iran and the P5+1 run into trouble.
“It will take some time until everything goes back to what it used to be,” said a Japan-based VLCC broker.
Although Western P&I club cover is allowed for another four months for carrying Iranian petrochemicals and crude cargoes to specific destinations, the uncertainty still lurks, the broker said.
There are several other grey areas that are keeping the shipping industry and insurance officials on tenterhooks. While the US has allowed claim payments to be made after November 24 for incidents that occur during the suspension period, the same isn’t the case so far with the EU.
The International Group, a consortium of 13 P&I clubs, has voiced concerns and is currently engaging with the European Commission to get the EU policy aligned with that of the US.
These issues have made industry players wary of participating in Iranian crude and petrochemical trade, making Alexandra 1′s latest voyage all the more significant.
The cover for claims arising during the extended suspension period could be adversely affected by reinsurance shortfalls or by inability to make payments after November 24, The Japan Ship Owners’ Mutual Protection & Indemnity Association said in a July 28 statement.
Notwithstanding the extended suspension period, the ability of P&I clubs “to respond to any incident arising from trading to Iran, including the provision of security, remains limited, not least by the reluctance of banks and other service providers to be involved in the business,” the association said.
Iran had been exporting some 2.2-2.3 million b/d of crude before the US and EU sanctions came into effect in late June and the beginning of July two years ago. Last year, according to International Energy Agency estimates, imports of Iranian crude by India, China, Japan, South Korea, Taiwan and Turkey averaged just 1.1 million b/d.