April 17, 2012 | Forbes

The Magician Behind Iran’s Vanishing Oil Tankers

April 17, 2012 | Forbes

The Magician Behind Iran’s Vanishing Oil Tankers

With sanctions bearing down on Iran, the Iranian shipping industry has been putting on a carnival of flim-flam to hide its doings. In the latest twist on this sanctions-dodging performance, Iran’s oil tankers have begun vanishing from the public radar, making it harder to track what they are doing with the oil that helps sustain Iran’s proliferation prone regime.

The ships themselves are still out there somewhere. But, as Reuters reported last week,  they have been turning off their onboard vessel tracking systems, which, as required by the International Maritime Organization, are meant to report where they are. Presto! — in recent weeks, Iranian oil tankers have been disappearing from the publicly visible global grid.

That’s quite an act of prestidigitation, given that Iran fields one of the world’s biggest tanker fleets, owned by an Iranian company called NITC — formerly the National Iranian Tanker Company. Of 39 vessels in the fleet listed on NITC’s web site, data from the IHS Fairplay shipping information service shows that as of April 14, well over half had stopped reporting their locations.

That makes this a terrific moment to focus on the magician behind this stealth tanker fleet, NITC itself. Unlike Iran’s fleet of bulk and container carriers linked to the Islamic Republic of Iran Shipping Lines (IRISL), NITC is not under any sanctions, at least not yet. The U.S. Congress has been working on a new round of Iran sanctions legislation, that would target NITC, along with Iran’s state-owned National Iranian Oil Company.

NITC officials have been protesting that their company is a thoroughly professional private enterprise, simply going about its business, with no connection to Iran’s regime. In a “Chairman’s Message” on the NITC web site, NITC’s chairman and chief executive officer, Hamid Behbahani, states that NITC is “100% privately owned, respects all international conventions” and “By no means have we had any link, direct or indirect, with any political or military organizations.”

With dazzling indifference to the realities of NITC’s own disappearing tankers, Behbahani also states that NITC “emphasizes its commitment to transparency as far as operations are concerned.”

The stealth fleet is not the first vanishing act related to NITC. For the first two decades of Iran’s 33-year-old Islamic regime, NITC operated as a state-owned enterprise, a subsidiary of the state oil company, NIOC. Then, in 2000, NITC was officially “privatized.” Presto! The official links to Iran’s regime disappeared. It became a private Iranian company that simply happens to ship huge quantities of Iranian oil to fill the coffers of Iran’s regime. As sanctions have pushed Iran out of the global financial system, forcing it toward barter deals of oil for goods and services, some of these tankers have been spotted doubling as oil storage facilities. That’s a practice not unknown in the oil industry, but in the case of Iran’s efforts to dodge sanctions it should be of special interest. In effect, tankers can double as mobile bank accounts.

Another vanishing act took place early this year, involving the longtime former head of NITC, Mohammad Souri. Educated in the U.S. in the late 1970s, fluent in English and apparently adept at responding to the needs of Iran’s Islamic regime, Souri returned to Iran in 1979, the year of the Islamic revolution. He rose rapidly. After a stint running IRISL, he became head of NITC in 1985, and held that position for more than 26 years. Along the way, Souri built up the tanker fleet, acquired a global network of industry contacts and amassed a collection of international shipping awards for the company and himself. Just this past December, at a ceremony in Dubai, Lloyd’s List anointed him Tanker Operator of the Year for the Middle East and Indian Subcontinent.

Then, this past January, as U.S. law-makers began seriously moving to target NITC for sanctions, Souri abruptly retired — saying he would continue to advise and support NITC’s new chairman, Behbahani. Since his sudden retirement, Souri himself, like NITC’s disappearing ships, has dropped out of sight. His replacement, Behbahani, is a mentor and longtime ally of Iran’s President Mahmoud Ahmadinejad, who tapped him in 2009 to serve as transportation minister. When Behbahani proved such a fiasco in that post that he was impeached by the Iranian parliament, Ahmadinejad took him on as transportation adviser.

NITC’s longtime insurance arrangements have also gone through their own recent metamorphosis. For years, NITC obtained its coverage from well-established European marine insurers. But by 2011, with financial sanctions tightening on Iran,  these insurers were reluctant to deal with Iranian companies. NITC has turned instead to an Iranian insurance arrangement conjured up by a group of Iranian shippers, called Kish Protection and Indemnity Club. How Kish P&I would handle a payout is a mystery the insurance industry has been pondering, since — as an article in the Insurance Journal noted last month — “Any claim against it would likely have to go through a sanctioned bank.”

Multiplying the reasons for concern, NITC is about to take delivery of yet more tankers. Just this past week, the Tehran Times was proclaiming “Chinese shipyards are to deliver 12 supertankers to Iran, with the final vessel ready by 2013.”

In sum, what’s behind the new vanishing act of Iran’s oil tankers? They are owned by a “privatized” Iranian company now run by a longtime pal of Ahmadinejad, possibly with the advice and support of a longtime regime loyalist, Souri — who ran NITC for more than a quarter of a century, but disappeared from the public radar shortly before the tankers themselves began to flicker out of view. They are insured by a new Iranian outfit that might have to find ways around sanctions to deliver on a claim. Many of these ships are doing who-knows-what, who-knows-where at the moment, and Iran expects China to deliver yet more supertankers to expand the fleet.

How to square this with NITC’s assurances that it is a 100% privately-owned company, independent of the interests or organizations of the Iranian regime, and committed, in its operations, to transparency? When it comes to Iran’s oil traffic, should we believe in magic?

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