Overseas Shipholding Group Inc. (OSGIQ), the largest U.S. crude-tanker owner, said the pool in which its ships operate will no longer go to Iran after the European Union agreed to an embargo on oil from the Persian Gulf nation.
Tankers International LLC, which manages a pool of vessels from seven companies including OSG, told the New York-based company the trade will end because of “regulations adopted by the European Union in late January 2012 and other factors,” Chief Executive Officer Morten Arntzen said in an e-mail today.
Four vessels owned by OSG and managed by Tankers International, which has its head office in Cyprus, called at Iran’s largest oil terminal in the past year, including one last month, ship-tracking data compiled by Bloomberg show.
OSG “complies with all applicable laws and regulations concerning where and to whom OSG trades its vessels,” Arntzen wrote in the e-mail. “As these laws and regulations change, OSG will comply with the changes.”
The EU agreed Jan. 23 to a phased-in ban on the purchase, transport, financing and insurance of Iranian oil. The embargo still needs to be implemented by the European Commission, the bloc’s regulatory arm. The sanctions will extend to about 95 percent of tankers because they are insured under rules governed by European law, Andrew Bardot, the London-based secretary and executive officer of the International Group of P&I Clubs, said in an interview Jan. 26.
Shares of OSG fell 13 percent to $10.295 as of 2:51 p.m. in New York after the company said it would suspend dividends. OSG will report a loss of $178.6 million this year, compared with $204.4 million in 2011, according to the median of five analyst estimates compiled by Bloomberg.
OSG’s Overseas Rosalyn arrived at Kharg Island in Iran on Jan. 27 and departed the next day, ship-tracking data compiled by Bloomberg show. It left about 16 feet deeper in the water, an indication a cargo was loaded. The Overseas Everest visited July 7, the Overseas Sovereign on Aug. 2 and the Overseas Mulan on May 2 and Aug. 19.
All four ships are listed as fully owned by OSG on its website and are managed by Tankers International. The ships fly the Marshall Islands flag, which means they are registered there for regulatory purposes, according to data on the website of International Registries Inc. Almost 9 percent of the tanker fleet is flagged in the Marshall Islands, behind Panama and Liberia, according to data compiled by Clarkson.
“Companies doing business with Iran will find themselves under increasing pressure to discontinue that activity,” said Victor Comras, a retired U.S. diplomat who monitored UN counter-terrorism measures and is now a special counsel to The Eren Law Firm in Washington. “With current sanctions, if they can demonstrate that the ship is not controlled by them, then it would appear to be a situation where sanctions wouldn’t apply.”
Founded in 1948, OSG has 111 vessels and 3,500 employees, according to its website. Rates for very large crude carriers, each capable of carrying about 2 million barrels of oil, fell 10 percent to $28,291 a day this year, Clarkson data show.
Ship owners sometimes group their vessels to coordinate charters and improve earnings. The Tankers International Pool operates 43 very large crude carriers, or VLCCs, from OSG and six other companies, including Antwerp-based Euronav NV (EURN) and St. Helier, Channel Islands-based DHT Holdings Inc. (DHT)
“All the owners in the pool have stated that they will not trade Iran because of the consequences,” DHT CEO Svein Moxnes Harfjeld said by phone. “DHT is complying with all relevant regulations and sanctions and following recent developments our vessels have been instructed not to trade Iran.”
Western nations are trying to curb Iran’s oil income in an attempt to stop the nation from developing nuclear weapons. The government in Tehran says its nuclear program is for civilian purposes. It is the second-biggest producer in the Organization of Petroleum Exporting Countries and had daily output of 3.55 million barrels in January, data compiled by Bloomberg show.
Oil sales earned Iran $73 billion in 2010, accounting for about 50 percent of government revenue and 80 percent of exports, the U.S. Energy Department estimates.
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