US to sanction firms masking Iranian oil shipments

American officials will meet with government, company officials in Malaysia that import crude from Tehran.

Malta-flagged Iranian crude oil supertanker 370 (R) (photo credit: Tim Chong / Reuters)
Malta-flagged Iranian crude oil supertanker 370 (R)
(photo credit: Tim Chong / Reuters)
SINGAPORE - The United States will target companies that help disguise Iranian oil shipments to skirt Western sanctions, a State Department official said, as Washington steps up the pressure on Tehran to abandon its nuclear program.
The sanctions have cost Iran billions of dollars in lost oil revenue. Its exports plunged by more than half last year, forcing a nation that was once OPEC's second largest oil producer to try and sell its crude under the radar.
The US official said he planned this week to meet government and company officials in Malaysia, where a Reuters investigation last year revealed two tankers lying at anchor near the tax-haven port of Labuan, storing millions of barrels of Iranian oil
"Concealing the origin of Iranian crude, or shipping Iranian crude to a non-excepted country is a sanctionable offense," the US official told Reuters.
"We are actively looking at a variety of companies where we see instances of potential sanctions offenses and we are looking to target companies that are engaged in that," the official said, declining to name any of these companies.
The official did not say what action the United States would take against the companies, but it can apply sanctions that prevent the companies from doing business with US firms.
Ship-to-ship transfers (STS) are a common tactic Iran and its buyers use to get around the sanctions.
Cargoes of Iranian oil are dispatched from large tankers to other vessels and then blended with oil from another source to alter its physical specification. Shipping documents are then issued with a new origin for the blended cargoes.
"We are doing a lot of outreach to companies and refineries to explain what the risks are and the steps they should be taking as responsible companies to make sure they are not importing Iranian crude under false certificates of origin," the US official said, referring to these covert operations.
"They are increasingly aware of this STS issue."
The US official said the two tankers at the center of the Reuters investigation remain anchored off Malaysia without any shipping insurance or crew. He declined to give further details.
Obama imposes stricter sanctions
US President Barack Obama this month signed into law a new batch of tough sanctions that extend to Iran's ports, shipping and shipbuilding industries. The measures coincide with renewed international efforts to persuade Iran to resume negotiations in February over its nuclear program.
Under a 2011 US sanctions law, banks in countries that buy Iranian oil can be cut off from the US financial system unless these purchases are reduced, and Iran's top Asian oil customers - China, India, Japan and South Korea - have all gained waivers by cutting imports by about a quarter last year.
The US official reiterated that Washington wanted to see buyers cutting Iranian oil imports to qualify for continued exceptions from the sanctions.
"We're going to continue to expect additional significant reductions off what is currently a lower base," he said.
Refiners in South Korea, the fourth biggest buyer of Iranian crude, need to make further cuts to offset new purchases of Iranian oil from Samsung Total Petrochemicals, the official said.
The South Korean joint venture revived the contract with Iran after a year's hiatus, as thin margins in plastics make the cheap crude from Iran hard to resist.
"The exception (to US sanctions) applies to countries, not companies. For example, for Korea or another importing country to continue to qualify for exception, they are going to have to figure out how to further reduce," the US official said.