June 26, 2007 / 12:11 PM / 13 years ago

Iran oil exports at risk in UK ship sanctions plan

LONDON (Reuters) - A British proposal to target Iran’s national shipping lines under a draft U.N. sanctions resolution could temporarily curb Tehran’s ability to export oil to world markets, maritime sources said on Tuesday.

The confidential draft, obtained by Reuters on Friday, suggests denying rights of passage to Iranian merchant ships in foreign waters. The withdrawal of landing rights for Iranian aircraft is also suggested.

The proposal would have countries “deny permission to take off from, land in or overfly their territories, or berth in or secure passage through their territorial waters, of all aircraft and vessels owned or controlled by Iranian airlines or shipping companies.”

Under the United Nations Law of the Sea Convention ships of all nations have the right of innocent passage through a country’s territorial seas. U.N. member nations are bound to enforce Security Council resolutions once adopted.

Oil shipping sources said on Tuesday that, if adopted, the proposal could have a short-term effect on Iran’s ability to supply oil to world markets, even though U.S. and European officials insist it is not meant to target Iran’s oil.

“It’s a question of logistics,” said James Davis of Lloyd’s Marine Intelligence Unit (LMIU) in London, a consultancy that tracks global oil tanker flows.

SHORT-TERM IMPACT

He said Iran could revert to the commercial shipping market to move its oil, thereby side-stepping the United Nations.

“Whether there is enough tanker capacity to cover it is another question, but I think we are looking at a short-term impact,” he said.

The draft sanctions proposal is aimed at ratcheting up pressure on Iran for defying U.N. Security Council demands to halt uranium enrichment.

Iran says its goal is peaceful generation of electricity. The West fears the enrichment is aimed at producing a nuclear weapon.

Oil ship industry sources estimate that around 40 percent of Iran’s crude oil exports are shipped on National Iranian Tanker Company (NITC) vessels. An NITC official contacted by Reuters in Tehran declined to say how much the state-owned fleet carried.

Iran, OPEC’s second largest producer, pumps 3.85 million barrels of crude a day and exports 2.4 million barrels of that on tankers by sea, with about 60 percent bound for Asia and the remainder shipped to Europe.

Washington has banned U.S. companies from lifting Iranian oil and investing in Iran since 1995.

“For 2007 we’ve observed under 40 percent of crude oil exports shipped on NITC vessels, mostly from Kharg Island in the Gulf,” LMIU’s Davis said.

One of the biggest oil tanker firms operating in the Gulf estimated the figure to be 42 percent of exports.

Davis said the remainder was moved by oil firms aboard their own supertanker fleets or aboard privately chartered vessels.

“The main lifters are Japanese, Indian, Chinese, South Korean. A small amount goes to southern Europe,” he said.

A second proposal would target aircraft and vessels — including those operated by the Islamic of Republic of Iran Shipping Line and Iran Air Cargo — that traffic in goods banned under two previous U.N. resolutions.

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