Ship Operators Vetting Bunker Suppliers for Iranian Product

An Iranian oil technician checks the oil separator facilities in Azadegan oil field, near Ahvaz, Iran.

A.P. Moeller-Maersk A/S (Maersk) is vetting bunker suppliers and monitoring fuel specifications to avoid Iranian bunkers, according to Maersk Oil Trading's Jesper Rosenkrans.

“We’re doing everything we can to avoid buying something we wouldn’t want to buy,” Mr Rosenkrans told Bloomberg yesterday, whose company buys more than 10 million tons of bunkers a year.

“If somebody came to me and said, ‘Can you guarantee there isn’t another product blended into a bigger bunker pool,’ then the answer would probably be ‘no’,” said Rosenkrans.

Western sanctions levelled at the Islamic Republic take full effect from July 1st, with Ship & Bunker reporting last week that ship owners will lose P&I Cover if they are found to be carrying Iranian bunkers.

Doing the Right Thing

The world’s largest shipping company is doing the right thing according to Peter Sand, an analyst at the Baltic and International Maritime Council (BIMCO), who says it represents 65 percent of the world’s tonnage and has members in more than 120 countries.

According to Sand, "Companies should verify their suppliers so that they can demonstrate they sought to avoid Iranian bunkers should they then be accused of breaching sanctions."

However, avoiding Iranian bunkers might not be quite as easy as it might appear.

“With bunkers there isn’t fingerprinting as with crude oil,” FOBAS consultant Andy Wright told Bloomberg, “The origin would technically be very difficult to establish, if not impossible.”

“This is a problem we didn’t foresee,” said Sand, “We don’t know how much Iranian oil is already blended in.”

Barclays Capital say supplies from Iran are a “vital blending component” for bunkers, with the Middle East nation's product responsible for 8 percent of bunkers exported to Asia, and about a third of the supply at key port Fujairah.

And as Ship & Bunker reported last Wednesday, product intended for the UAE port is reportedly being diverted to Singapore where the huge volumes in storage there make disguising the origin of shipping fuel much easier than at their original destination.

Ira Birns, Chief Financial Officer at independent bunker supplier World Fuel Services Corporation (WFS) responding by email to Bloomberg questions on the matter, said it has policies and procedures in place to ensure compliance with sanctions, but doesn’t comment on specific policies or contractual arrangements.