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These Are The New Strategies That Tanker Tracking Firms Are Using To Monitor Iran’s “Dark Fleet”

Courtesy of ZeroHedge View original post here.

These Are The New Strategies That Tanker Tracking Firms Are Using To Monitor Iran's "Dark Fleet"

Despite Washington's pleas that UK/Gibraltar authorities refrain from releasing the Iranian-flagged Adrian Darya-1 tanker over concerns that it would deliver its 2.1 million barrels of Iranian crude oil to Syria, the ship was released last month. Shortly after, it "went dark" – turning off its transponder earlier this month to mask the fact that it was delivering a load of crude to Syria – or at least that's what National Security Advisor John Bolton suspects happened.

And not without good reason. The tanker, which was photographed off Syrian port of Tartus, is one more reason for the US and Europe to treat Iran's written assurances that it wouldn't engage in such "illegal" deliveriesassurances that the UK used as the basis for its decision to release the vessel from custody – with wariness and suspicion.

But the Adrian Darya-1 is merely one example of how Iran has managed to keep exporting oil, often in violation of US and EU sanctions, in spite of the international crackdown. As Bloomberg reports, Tehran is engaged in a cat-and-mouse game with tanker-tracking firms around the world that have developed new strategies for monitoring Iran's "Dark Fleet".

The quest has led to ever more inventive methods of tracking ships, and divergent views on the amounts of crude secretly slipping into world markets. That’s because the vessels have mostly "gone dark" since sanctions were tightened this year, switching off transponders that would reveal their location.

"Iran is a black box, but it’s also not a black box" as there are ways to uncover secretive activity, said Devin Geoghegan, global director of petroleum intelligence at Genscape Inc. in Denver, Colorado. "Iran is simply doing a better job of putting their oil into other people’s hands – or their own storage tin-cans – than anybody has expected."

The Trump Administration's goal of driving Iranian oil exports "to zero" hasn't been very successful, as Iranian Oil Minister Bijan Zanganeh insists that he is working "day and night" to protect sales, using a number of clandestine options.

The various companies struggling to monitor the flow of oil out of Iran agree that Iranian oil exports are far from zero. But analysts' estimates on how much vary from a couple hundred thousand barrels a day to more than a million.

One Switzerland-based tracking firm believes Iran is shipping barely one-third of the amount it sold during the last round of heightened sanctions earlier in the decade, when Barack Obama was in office. According to Daniel Gerber, the firm's CEO, the Trump Administration has been largely successful at curtailing Iran's exports.

"Iran is as secretive now as any time over the past 40 years," said Daniel Gerber, chief executive officer of Geneva-based tanker-tracking firm Petro-Logistics SA. "There’s a wide array of diverging estimates of their exports in the industry, with a series of accounting problems causing erroneous higher numbers to come into some of these."

Iran is now barely shipping a third of the amount it sold during the previous round of sanctions imposed earlier this decade, Gerber said. Some other estimates have been inflated because they include all the oil that’s been loaded onto tankers, or put into domestic storage, rather than just what’s been shipped overseas, he said.

"The Trump administration has been successful at curtailing Iran’s exports on an unprecedented scale," according to Gerber, who said Petro-Logistics is able to obtain details on the volumes and crude-type of individual cargoes, as well as on the counter-parties buying them.

Paris-based tracking firm Kpler has developed a unique strategy for tracking Iranian crude. It uses commercial satellite images, then cross-references them with data from customs agencies and reports from various ports. Because of this, Kpler believes Iran has maintained "limited" flows of oil into China – Iran's most important customer – as well as Turkey and Syria.

Kpler analyst Samah Ahmed believes Iran is employing a range of techniques to try to avoid detection, including "several ship-to-ship transfers off-radar" – a technique that is also famously used by North Korea. Like Petro-Logistics, Kpler believes the Trump Administration has been largely successful at choking off Iran's oil exports. By its account, Kpler believes Iranian oil exports have slumped 90% to just 400,000 barrels a day since the Trump Administration abandoned the Iranian nuclear deal in May 2018.

"The goal of bringing Iran’s exports down to zero was never attained," said Homayoun Falakshahi, an analyst at the firm. Yet "the Trump administration has been obviously very successful in bringing maximum pressure."

Yet, the amount of oil that Iran sells for cash is likely even lower, since a large percentage of the oil that it exports is used to pay off its debts to China.

The actual volume that Iran is selling for cash is probably even lower, according to Sara Vakhshouri, head of consultants SVB Energy International in Washington, D.C.

Some cargoes are sold to repay debts to China, and others are moved into so-called bonded storage there without passing customs, meaning they’re still owned by Iran. As a result, total sales in July may have been as little as 100,000 barrels a day, she said.

Finally, Genscape's Geoghegan believes Iran's output of crude and condensate has fallen only 15% since the first quarter of 2018. Total production might be as much as 3.9 million barrels per day, with exports as high as 1 million bpd as Iran moves "full speed ahead", drilling at new fields in the West Karoun region.

Among the various commercial tracking firms, Genscape's methodology is truly unique. Instead of relying on satellite images of tanker traffic, Genscape uses satellite photos of gas flaring at oil fields to gauge their levels of activity.

But according to Geoghegan, the resilience of Iran's oil industry might not endure for much longer. As storage fills up, Iran may need to lower its output.

"We have seen every tin-can that they have get filled up, and we’ve seen oil fill up in areas that they haven’t historically used," Geoghegan said. "They’re going to hit a brick wall at some point, and their production is going to take another leg down."

Hence why Iran has been seizing ships in the Persian Gulf and Strait of Hormuz suspected of smuggling – ships like the "tugboat" suspected of smuggling nearly 284,000 liters of diesel. As Washington's campaign of "massive pressure" intensifies, Tehran's is continuing with its campaign of "counter-pressure" to try and protect its oil-dependent economy.

 


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