Identifying Iranian Bunkers in Singapore "A Major Headache"

Identifying Iranian bunkers is a major headache

Identifying fuel oil from Iran in Singapore has become "a major headache" for shipping companies as Iranian product in the world's largest bunker market was "as ubiquitous as salt in seawater," according to a report carried by the Dow Jones news service.

In 2011 the port state averaged monthly sales of almost 3.6 million tonnes and the practice of combining cargos from a number of international producers makes it exceedingly difficult for shipping companies to guarantee the fuel they take on board is free of Iranian product.

As recently reported by Ship & Bunker, Western sanctions levelled at the Islamic Republic taking full effect from July 1, 2012 will mean ship owners found carrying Iranian product, either as fuel or cargos, will lose their P&I Cover.

In a response to questions posed by Dow Jones Newswires the P&I Groups said, “by virtue of the clubs’ sanction rules, they would lose the benefit of their club cover and would therefore be effectively trading uninsured, unless they find alternative cover with a non-EU regulated insurer.”

Singapore-based Energy Correspondent Gurdeep Singh was reported as saying "guarantees of origin are difficult to give or get," echoing the recent comments of Maersk Oil Trading's Jesper Rosenkrans who added they were "doing everything we can to avoid buying something we wouldn’t want to buy."

Barclays Capital have estimated Iranian product is responsible for 8 percent of bunkers exported to Asia.

Product transported by Iranian vessels can also be held offshore, divided, and sold-on, adding to the complexity of tracing the origin of cargoes amongst the huge volumes handled by the port - a fact that was said to be responsible for the recent diversion of initially Fujairah bound cargoes to Singapore.

It has been suggested that in order to guarantee bunkers are free from Iranian oil and adhere to sanctions, shippers could purchase fuel from Western producers with refineries in Singapore, such as ExxonMobil or Royal Dutch Shell.

But whichever way the guarantee comes, analysts are expecting shipping firms to incur increased charges for that fuel.