China delivers first of new Iranian oil tankers

Reuters: A Chinese shipyard has delivered the first of 12 supertankers to Iran, giving Tehran extra capacity to transport its oil to Asia as it struggles against Western sanctions, but it is unclear if the ship has the permits necessary to call at global ports.

Asian countries including China, India and South Korea are among Iran's biggest oil customers, but, to get around a European Union ban on shipping insurance imposed since July 1, they must use the fleet of the National Iranian Tanker Co. (NITC) to bring the crude home. Shipments, however, have become unpredictable as NITC's limited shipping capacity is overstretched, and industry sources said the arrival of the 318,000 deadweight tonne "Panda" in the Gulf in early October may help ease the strain. The very large crude carrier (VLCC) left Waigaoqiao Shipbuilding on Sept. 18. It was initially due to sail to Iran in May, but the sanctions delayed its delivery. A second vessel, the Souvenir, is conducting sea trials in China, but it is unclear when it would begin commercial operations.

"The first of Iran's VLCCs is on its way to Iran. It is unclear how the tanker is being insured in light of the Western sanctions, but I'm sure Iran has found a way," said a Singapore-based oil shipping executive who declined to be named as he was not authorised to talk to the media. Western insurers provide indemnity for the majority of the world's tanker fleet. Western sanctions to pressure Tehran to halt its disputed nuclear programme have cut its crude exports by nearly half to less than one million barrels a day.

Under a $1.2 billion contract, Waigaoqiao Shipbuilding Co Ltd, a unit of China CSSC Holdings Ltd, and Dalian Shipbuilding Industry Co. Ltd plan to deliver 12 supertankers by the end of 2013 to NITC, which would boost the capacity of its fleet by nearly 40 percent to around 86 million barrels.

Seven more VLCCs are scheduled for delivery by the end of this year, with the remaining four being built in 2013, giving Iran greater flexibility to store and transport its oil.