LONDON / DUBAI / PANAMA CITY (Reuters) – Somewhere on his voyage from the waters off Iran, around the southern tip of Africa and into the Mediterranean, the Grace 1 oil tanker lost the flag he sailed under and was no longer registered Panama. Iran claimed it later than his own.
FILE PHOTO: At the stern of Iranian oil tanker Grace 1, a flag of Panama, moored off the British Mediterranean coast by British Royal Marines on suspicion of sanctions being imposed on Syria, is blowing in the Strait of Gibraltar, southern Spain, 20 REUTERS / Jon Nazca / File Photo
The ship carrying 2 million barrels of Iranian crude oil was seized by British Royal Marines off Gibraltar, causing tensions in the Gulf where Iran was jailed. A British flagged vessel Retribution.
Grace 1 remains seized, not because of its flag, but because it was suspected in violation of EU sanctions on oil transport to Syria, an allegation Iran is denying.
Panama's attempt on 29 May to remove it from its register in the middle of the trip was part of global pressure on Iranian shipping.
Nations that register ships under so-called "flags of convenience" that allow them to legally sail have removed dozens of Iranian tankers from the list in recent months, aggravating the economic situation.
In Panama, the most important flag state in the world, 59 tankers shipped to Iran and Syria were eradicated earlier this year. This was welcomed by the United States, which wanted to cut off Tehran's exports of vital oil.
Panama and several other key flag states are scrutinizing the thousands of ships in their registers to make sure that they are in line with US sanctions imposed last year on Iran and since then have been further tightened.
A Reuters analysis of vessel registry data shows that Panama has removed around 55 Iranian tankers from the list since January, Togo at least three and Sierra Leone one.
This represents the bulk of its operational tanker fleet, which is the lifeblood of the oil-dominated economy, although Iran may have re-registered some ships among new flag states.
If a ship loses its flag, it usually loses cover if it does not immediately find an alternative and can be banned from calling at ports. Cheap flags also provide a topcoat for the final owner of a ship.
International registers charge shipowners for using their flags and provide tax incentives to attract businesses.
Iran said it still has many options.
"There are so many shipping companies we can use. Despite pressure from the US, many friendly countries are eager to help us and have offered to help us in this matter, "said an Iranian shipowner when asked if tankers would be removed from the list.
However, some nations have expressed caution. The world's third largest maritime registry, Liberia, indicated that its database automatically identified Iranian owned vessels or other connections to the country.
"Therefore, any request to register a vessel with an Iranian connection triggers a warning and is carefully reviewed by the registry's compliance and administrative staff," the register said.
Liberia said it is working closely with the US authorities to prevent what it calls a "malicious activity" in the maritime trade.
In many cases, Iran has re-listed ships under its own flag, making it more difficult to transport oil and other goods into and out of the dwindling number of countries willing to do business with it do.
Some shipping specialists said the Iranian flag was problematic, as people working for the Iranian registry could be expelled under US sanctions and pose a risk to anyone involved in the ships they list.
"Most insurance companies or banks will not be able to handle the Iranian flag because it is indeed the Iranian state," said Mike Salthouse, deputy global director of North of England P & I.
Customs officers can also sit up and take notice.
"One of the problems with an Iranian-flagged vessel is the 50 percent likelihood of a customs officer conducting a search, meaning that the cargo is delayed," said a UN sanctioner who declined. "All of this adds to the cost."
A former US diplomat said Washington is in frequent contact with Panama and other flag states to keep the ship registers "clean".
"We continue to disrupt the illegal oil shipments of the Qods Force, which benefit terrorist groups such as Hezbollah and the Assad regime (in Syria)," said a US State Department spokesman.
Qods Force refers to an elite unit of the Iranian Islamic Revolutionary Guards Corps, which is responsible for the Guards' overseas operations, and Hezbollah is an Iran-backed, heavily armed Shiite Muslim group that is part of the Lebanese coalition government.
"Almost 80 tankers involved in sanctionable activities have been denied the flag they need to sail," the spokesman added.
The flag removal of Iranian ships is just one way in which the international community can repress Iran.
US. Sanctions against oil exports aim to reduce Iran's sales to zero. Iran has sworn to continue exporting.
In the first three weeks of June, Iran exported about 300,000 barrels a day (bpd), a fraction of the 2.5 million bpd that Iran ships before the departure of President Donald Trump from the 2015 nuclear deal with major powers in May last year would have.
Egypt could also complicate life for Tehran by denying tankers access to the Mediterranean through the Suez Canal. The alternative route around Africa taken by Grace 1 before his capture is much longer.
The data from refining shipping showed that the Masal, an Iranian-flagged oil tanker, anchored in the waiting zone of the Suez Canal on 6 July. He stayed there until July 12, when he started to sail south. It left the Red Sea on July 17 and landed on the Iranian island of Larak on July 23.
Two Egyptian intelligence sources told Reuters that the tanker was stopped in the Red Sea by the authorities in July for no reason at all.
A second high-ranking Iranian government official involved in shipping refused to comment when asked about the Masal.
The Suez Canal Authority spokesman said that Egypt had prevented ships from crossing the Channel during wartime only, according to the Constantinople Convention. He declined to comment further. [UK]
The United Kingdom tightened when it confiscated the Grace 1 supertanker on July 4, accusing him of violating sanctions against Syria.
Two Iranian-flagged ships have been stranded in Brazilian ports for weeks for fuel shortages. The state oil company Petrobras refuses to sell them due to US sanctions. Two more Iranian ships in Brazil could also stay without enough fuel to sail home.
A recent incident off the coast of Pakistan last month shows how far Iran has gone to continue trading.
Iranian carrier Hayan left the Iranian port of Bandar Abbas on June 3, sailing for ship data from ship risk analyst Windward to Karachi on the Pakistani coast.
On June 7, it changed its name to Mehri II and its flag to Samoa, as the data showed when it made its way to the port of Karachi.
Six days later, the ship made a ship-to-ship transfer of its unknown cargo further off the Pakistani coast.
The ship then returned home and changed its flag back to Iran and its name back to Hayan.
Imran Ul Haq, spokesman for the Pakistan Maritime Security Agency, said he had no information when asked about the Iranian ship's activity.
Since the re-imposition of US sanctions, Iran has used ship-to-ship transports to transport oil and oil products.
The vessel data also shows that a separate Iranian cargo ship, the Ya Haydar, has sailed the Gulf and reports its flag as that of Samoa.
Samoa denies allowing Iran to register ships under its flag.
"The aforementioned Hayan or Ya Haydar vessels are neither listed nor registered in the Samoan shipping register," said Anastacia Amoa-Stowers of the Department of Shipping of the Samoan Ministry of Construction, Transportation and Infrastructure.
"As there are currently no Iranian ships registered in the Samoa register, there is no action to remove a ship from the list. In addition, there have never been any Iranian ships in Samoa's ship list – past and present.
Amoa-Stowers said Samoa is a closed ship list, which means that every foreign ship is one such it was illegal to hoist its flag.
The second high-ranking Iranian government official involved in shipping refused to comment when asked about the two ships.
A spokeswoman for the International Maritime Organization said the UN shipping agency had received information from Samoa, which was forwarded to the Member States.
Additional reports by Lesley Wroughton of Washington, Syed Raza Hassan of Karachi, Edward McAllister of Dakar, Alphonso Toweh of Monrovia, John Zodzi of Lome, Praveen Menon of Wellington, Yousef Saba and Sami Aboudi of Cairo; Edited by Mike Collett-White