Iran's main oil tanker firm NITC will struggle for some time to call at European ports, get foreign insurance and overcome obstacles under western sanctions, even after a top court has annulled its blacklisted status in the European Union.
An interim deal between Iran and world powers signed in November has provided the Islamic Republic with some sanctions relief, helping to boost oil sales. But continued restrictions on shipping and insurance have meant that a return to Tehran's pre-sanction export level of over 2 million barrels per day
(bpd) is still some way off.
The European court ruling "will not give them carte blanche to transport cargoes," said Andrew Bardot, executive officer of the International Group of P&I clubs, an association whose members insure the majority of the world's tanker fleet.
NITC, sanctioned by both the European Union and the United States, contested the EU's 2012 blacklisting designation, arguing that the firm is privately owned by Iranian pension funds, whose beneficial owners are pensioners. It has denied any links with the government or with the Revolutionary Guards.
The Luxembourg-based General Court, the second-highest court in the EU, said in a ruling delivered on July 3 that there was not "the slightest evidence capable of supporting" claims by the Council of the European Union that NITC was controlled by the government of Iran or that it provided financial support to the state via its shareholders. The court upheld NITC's plea that the European Union had made a "manifest error of assessment".
"It follows that there is no justification for the listing of the applicant," the ruling said, ordering the EU to pay NITC's court costs.
The court said, however, that its ruling would be suspended pending the expiry of the period for any appeal to be lodged. Rulings are typically suspended for two months pending appeals.
Over the past few years NITC has frequently changed the names of its vessels and their flags to conceal its activity.
NITC Managing Director Ali Akbar Safa'ie has been quoted by Iranian media in recent days as saying he hoped the firm would be able to return to European markets.
OIL SHIPPING LIFELINE
With a fleet of 37 supertankers and 14 smaller tankers, NITC has an overall carrying capacity of around 86 million barrels of oil and has played a crucial role in keeping Iran's exports flowing to buyers, especially in Asia.
Shipping industry sources said it was premature to expect NITC to reap any major gains, given that the carrier is still sanctioned by the United States and that the EU court ruling may be appealed.
"This will have no effect as long as the status quo continues. This means NITC will continue to transport oil sold cheaply and offload it in places like Asia including by ship-to-ship transfers on to other vessels. They are still experiencing some difficulties," one shipping industry source said.
"When the full fleet comes back, it will have a big impact as you will have millions of deadweight tonnes back on the international tanker market. If we assume there will be a nuclear deal with Iran, we are still talking 12 to 18 months before NITC is fully back."
Iran and the United States, France, Germany, Britain, Russia and China aim to reach a long-term deal by a July 20 deadline. Many diplomats and analysts say, however, that an extension may be needed in view of the wide gaps in negotiating positions.
Even if they meet the July 20 deadline, it is likely to take months to renegotiate trade contracts with shipping partners and brokers as well as secure international insurance cover, given that policies are typically renewed every year in February.
Under the interim agreement signed in November, which came into effect in January, Iran's exports should average 1 million bpd through to July 20. They have been above that level for several months now.
The accord included an easing on restrictions on ship insurance and allowed for less difficult shipping of oil that the OPEC member was permitted to sell to mainly Asian buyers.
But NITC is still unable to secure ship insurance from top providers in the West. Specialist protection and indemnity (P&I) insurers, mutually owned by shipping lines, dominate the market for insuring ocean-going vessels against pollution and injury claims, the biggest costs when a tanker sinks.
"The International Group clubs have not been providing P&I cover to shipowners engaging in the temporarily permitted Iranian trade due to the lack of confirmation from the EU/US that cover will be able to respond beyond the expiry of the six-month temporary suspension measures on 20 July," Bardot said.
NITC still will be hampered by western banking restrictions on the financing of cargoes as Iranian banks struggle to trade with their international banking counterparts.
"European financial institutions are still reluctant to use
(Iranian) banks that have been successful in getting off the EU list through law suits," said a former U.S. Treasury official now working in the private sector and dealing with sanctions.
"I would expect the European financial institutions would say, from an anti-money-laundering risk perspective, they are still not ready to do the business. This would include NITC
Source: Reuters
An interim deal between Iran and world powers signed in November has provided the Islamic Republic with some sanctions relief, helping to boost oil sales. But continued restrictions on shipping and insurance have meant that a return to Tehran's pre-sanction export level of over 2 million barrels per day
(bpd) is still some way off.
The European court ruling "will not give them carte blanche to transport cargoes," said Andrew Bardot, executive officer of the International Group of P&I clubs, an association whose members insure the majority of the world's tanker fleet.
NITC, sanctioned by both the European Union and the United States, contested the EU's 2012 blacklisting designation, arguing that the firm is privately owned by Iranian pension funds, whose beneficial owners are pensioners. It has denied any links with the government or with the Revolutionary Guards.
The Luxembourg-based General Court, the second-highest court in the EU, said in a ruling delivered on July 3 that there was not "the slightest evidence capable of supporting" claims by the Council of the European Union that NITC was controlled by the government of Iran or that it provided financial support to the state via its shareholders. The court upheld NITC's plea that the European Union had made a "manifest error of assessment".
"It follows that there is no justification for the listing of the applicant," the ruling said, ordering the EU to pay NITC's court costs.
The court said, however, that its ruling would be suspended pending the expiry of the period for any appeal to be lodged. Rulings are typically suspended for two months pending appeals.
Over the past few years NITC has frequently changed the names of its vessels and their flags to conceal its activity.
NITC Managing Director Ali Akbar Safa'ie has been quoted by Iranian media in recent days as saying he hoped the firm would be able to return to European markets.
OIL SHIPPING LIFELINE
With a fleet of 37 supertankers and 14 smaller tankers, NITC has an overall carrying capacity of around 86 million barrels of oil and has played a crucial role in keeping Iran's exports flowing to buyers, especially in Asia.
Shipping industry sources said it was premature to expect NITC to reap any major gains, given that the carrier is still sanctioned by the United States and that the EU court ruling may be appealed.
"This will have no effect as long as the status quo continues. This means NITC will continue to transport oil sold cheaply and offload it in places like Asia including by ship-to-ship transfers on to other vessels. They are still experiencing some difficulties," one shipping industry source said.
"When the full fleet comes back, it will have a big impact as you will have millions of deadweight tonnes back on the international tanker market. If we assume there will be a nuclear deal with Iran, we are still talking 12 to 18 months before NITC is fully back."
Iran and the United States, France, Germany, Britain, Russia and China aim to reach a long-term deal by a July 20 deadline. Many diplomats and analysts say, however, that an extension may be needed in view of the wide gaps in negotiating positions.
Even if they meet the July 20 deadline, it is likely to take months to renegotiate trade contracts with shipping partners and brokers as well as secure international insurance cover, given that policies are typically renewed every year in February.
Under the interim agreement signed in November, which came into effect in January, Iran's exports should average 1 million bpd through to July 20. They have been above that level for several months now.
The accord included an easing on restrictions on ship insurance and allowed for less difficult shipping of oil that the OPEC member was permitted to sell to mainly Asian buyers.
But NITC is still unable to secure ship insurance from top providers in the West. Specialist protection and indemnity (P&I) insurers, mutually owned by shipping lines, dominate the market for insuring ocean-going vessels against pollution and injury claims, the biggest costs when a tanker sinks.
"The International Group clubs have not been providing P&I cover to shipowners engaging in the temporarily permitted Iranian trade due to the lack of confirmation from the EU/US that cover will be able to respond beyond the expiry of the six-month temporary suspension measures on 20 July," Bardot said.
NITC still will be hampered by western banking restrictions on the financing of cargoes as Iranian banks struggle to trade with their international banking counterparts.
"European financial institutions are still reluctant to use
(Iranian) banks that have been successful in getting off the EU list through law suits," said a former U.S. Treasury official now working in the private sector and dealing with sanctions.
"I would expect the European financial institutions would say, from an anti-money-laundering risk perspective, they are still not ready to do the business. This would include NITC
Source: Reuters
