Cosco sanctioned by the US over Iranian crude imports
This is the strongest action yet taken by the US over China’s failure to comply with the unilateral sanctions as refineries continue to import Iranian crude and liquefied petroleum gas
US sanctions units of Chinese government’s shipping behemoth Cosco over Iran crude imports
THE US government has sanctioned subsidiaries of Chinese shipping giant Cosco for breaching sanctions on Iran, along with several other Chinese shipowners involved in transporting energy commodities cargoes via a complex ship-to-ship transfer logistics network used to obfuscate their origin and destination.
Cosco Shipping Tanker (Dalian) Co and Cosco Shipping Tanker (Dalian) Seaman & Ship Management Co were named as breaching the unilateral sanctions on Iran’s energy and shipping sector.
The Office of Foreign Assets Control notice, published today, provided additional detail that explained the blocking sanctions did not apply to the ultimate parent company, Cosco Shipping Corporation, or any other of its subsidiaries or holdings.
The Ofac note added five Chinese citizens to its Specially Designated Nationals list, connected to the two Cosco subisidiaries, as well as a further three maritime companies and one oil company. Sanctions would only apply to other Cosco entities if any of these blocked people held 50% or more of the company, according to the Ofac note.
Hong Kong’s China Concord Petroleum, Pegasus 88 and Kunlun Shipping, alongside Kunlun Holdings in the Virgin Islands were the other companies listed, with a total of 60 vessels affected.
This is the strongest action yet taken by the US over China’s failure to comply with the unilateral sanctions as refineries continue to import Iranian crude and liquefied petroleum gas.
Calling out subsidiaries of state government-owned Cosco, a shipping behemoth that ranks in the world’s top three for container, dry bulk and tanker ownership is a provocative move by the US Treasury. Despite the Ofac reassurance, other subsidiaries remain unaffected, insurers, charterers and other marine service providers will be scrambling to ascertain and assess their exposure to the parent company as well as the other companies.
Waivers allowing eight countries to import limited crude volumes since sanctions were re-imposed in November expired in May, alongside the introduction of “maximum pressure” rhetoric to cut Iran’s oil exports to zero.
Until now, the Trump administration has previously sanctioned an independent Chinese refinery for receiving a shipment of crude since the May deadline, and largely ignored widespread international reports detailing how China had revamped maritime logistics to evade sanctions detection by buying and establishing a secondary fleet of tankers and gas carriers alongside Iran’s sanctioned national tanker fleet of 60 vessels.
Analysts say the pace of under-the-radar shipments of Iranian oil to China has varied from between 300,000 barrels per day to 120,000 bpd in past months. Vessels have turned off their automatic identification system signals at strategic periods to hide the loading and ship-to-ship transfers of Iranian crude, which often sails on as many as three different vessels before reaching its destination.
There is a subterfuge fleet of about 21 tankers and liquefied petroleum gas carriers that are either Chinese- or Iranian-owned that are involved in shipping Iranian crude and gas to China, Syria and Turkey, according to analysis of Lloyd’s List Intelligence data.
Many of the Chinese companies cited have bought elderly tonnage in 2019 that is floating off Singapore and Malaysia, and recently Indonesia, supplying vessels with Iranian crude discharged from other ships, for onward sailing to China.
Cosco Shipping (Dalian) is the ISM manager of a fleet of 40 vessels, data from Lloyd’s List Intelligence show. The second Cosco subsidiary has nine in its fleet, while the other four companies combined are connected to a further 11 taking the total number of ships directly affected to 60.