Iran and sanction breaking LPG exports

Iran's new dark-shipping tactics to export gas to Asia

Image credit: VesselsValue, Ben Heubl, Dreamstime

A visual open-data investigation examines new export tactics by Iran and how the US sanction-plagued nation may have managed to smuggle liquefied petroleum gas (LPG) out of the country for sale to Asia.

In April 2020, a 114.2m long vessel called LAUREN vanished from the maritime monitoring space. Days later, it resurfaced on AIS international screens out of nowhere at the same spot where it had disappeared. It then entered United Arab Emiraes waters to ‘rendezvous’ with two other ships on separate occasions, one operated by a US-sanctioned company.

What reads like the plot of a John le Carré novel is actually stranger than fiction. Within ten days at the end of April last year, the LAUREN performed the magic trick not once but twice.

During the flashes of dark seafaring, satellite imagery reveals the red vessel anchoring at an Iranian LPG port it was never meant to visit - it spoofed records by signalling it was heading for a port in Kuwait.

As it approaches an area less than two miles off the exclusive economic zone (EEZ) of the United Arab Emirates, its operators deem it safe to turn back on the AIS signal. There it meets up with two vessels, one of them the GAS SELLAN, another liquefied petroleum gas tanker flagged in Vietnam.

Export LPG

Image credit: E&T, BH, VesselsValue, VesselFinder

Map of AIS records

US authorities see the irregularity in the vessel's operation and management by the sanctioned Vietnam Gas And Chemicals Transportation Corporation, which does business in transportation services for petroleum, chemical products, LPG and bulk cargo.

Last December, Vietnam Gas and Chemicals Trans Corp (PCT.HN, previously Cuu Long Petro Gas Service), was added to the ‘specially designated nationals and blocked persons’ list (SDN) compiled by the US Office of Foreign Assets Control (OFAC) at the US Department of the Treasury. The list is comprised of entities like terrorists and narcotics traffickers whose assets are blocked and with whom US entities are prohibited from doing business.

Operator-rating sites like IFMAT now indicate the entity with a red alert label. It's designated or sanctioned for contributing to “terror, weapons of mass destruction (WMD) and human rights violation.” It cites significant transactions for the transport of petroleum products from Iran on or after 5 November 2018. The 40-year-old Vietnamese executive Vo Ngoc Phung, involved in the company's business, was also listed on OFAC's SDN.

I contacted the company via email to asked for a statement in regards to the events last April. There was no response at the time of publication.

What may have happened?

On the grounds of forensic open-data analysis, the behaviour the three vessels displayed (see map with AIS signal records) is “extremely strange,” one expert at a private satellite imaging company says.

Data/credit: VesselFinder; Analysis: @BenHeubl

After two days at port with its AIS signal turned off, the LAUREN then rendezvous with two vessels on separate occasions. Each time, draft data before and after the encounters suggest the Lauren lost weight, indicating some sort of transhippment of cargo may have taken place. This all happened in UAE waters, 200-500m off the coast of Dubai. 

The Strait of Hormuz is a busy place. It's the world’s most important oil transit chokepoint because of its oil flow. In 2019, daily oil flow averaged 21 million barrels a day, one-fifth of global petro liquids consumption. Going dark is by no means a safe endeavour (neither for large fishing reefer vessels, we found). However, due to growing fears of attacks such as tanker seizures or drone shoot-downs, some vessel operators frequently chose to shut down their AIS signal, 2019 Bloomberg data suggests.

However, in the case of no AIS and at-sea encounters involving the LAUREN, the GAS SELLAN and the CROWN, now called Paula, let's assume more devious intentions. 

The behaviour fits a general pattern displayed increasingly by China recently to import US-sanctioned Iranian oil, helping to finance the Islamic Republic. According to a WSJ report from March, China was expected to import 918,000 barrels of oil per day in March. 

Now the appetite may have broadened to include LPG exports. IHS Markit cites strong LPG demand from China recently, amid a wave of new petrochemical plants added. The behaviour from last April, potentially using Vietnamese US-sanctioned operators as a vehicle for trade, is “suspicious,” an expert at London-based shipping intelligence company VesselsValue says. The analyst was unable to say for certain if gas was being definitely transferred from ship to ship, but believes "something is obviously going on".

"They [the three ships involved] would not travel to the Middle East just to sit in anchorage and not do anything. The changes in the vessels’ drafts — how deep the vessel is sitting in the water, down to how heavily loaded it is with cargo — looks suspicious,” the representative explained.

AIS was developed as a navigation safety tool, one expert says. Switching it off became a way of disguising where the ship's position is. Additional information from AIS, such as 'next port of call' and so on, also disappears in this way, says Jakob P. Larsen, at BIMCO, one of the largest international shipping associations representing shipowners. “Any ship involved in nefarious activities can use it as a disguise. It’s very common among sanction busters or illegal fishing activities. When they feel they are safe again they switch it back on”. 

Guidance issued by the US Departments of State and Treasury and the US Coast Guard state that “although, safety issues may at times prompt legitimate disablement of AIS transmission, vessels engaged in illicit activities may intentionally disable their AIS transponders or manipulate the data transmitted in order to mask their movement”. 

Before the point in October 2020 when the UN arms embargo on Iran expired, the UN Security Council sanctions did not impose restrictions on the export of petroleum from Iran

Further investigation into links between management structures of Vietnam Gas and Chemicals Transportation Corp (CUU Long Petro Gas Service) and the three vessels involved in the affair last year shows its involvement - though, none of the company’s five own vessels participated.

VesselsValue’s intelligence shows the company operates as GAS SELLAN’s technical and ISM (International Safety Management) manager.

A tanker's manager is the entity responsible for the technical side of things, such as maintenance, Larsen explains. The operator is more important in the commercial operation and for arranging the business of transshipments. 

“The ship operator is responsible for the commercial operation of the ship, arranges the customers, which cargoes to transport from A to B,” he adds.

In the case of the GAS SELLAN, the operator (and owner) is reported as FGAS Petro Co. The Hanoi City-based company was added to the ‘Dirty List’ last May, a composition of bad companies maintained by Burma Campaign UK, a human rights NGO. It includes entities assisting Myanmar’s military to continue to commit human rights violations.

FGAS Petro is an energy and shipping firm that owns the Golden Amor bulk carrier, which uses the Ahlone International Port Terminal in Yangon, a terminal owned by the Burmese military, responsible for a bloody crackdown this spring on unarmed protesters in the country, seeing hundreds killed. 

Another vessel involved in last April's events, the CROWN, now Vietnam flagged PAULA, is owned by Golden Lotus Oil Gas & Real, for which IMRRA’s commercial risk rating aimed at managers and operators, gives a poor 47 per cent confidence score, making it a bold statement to the maritime business community that stakeholders review it.

IFMAT warns that its owner, PetroVietnam Transportation Corp (PVTrans), also bears a considerable risk for potential business partners. PVTrans is alleged to have been involved in “knowingly transported Iranian petroleum-based products several times, using its tanker fleet,” according to ITMAT, a human rights organisation specialising in Iran.

The LAUREN, which turned off its AIS signal last year when it travelled to the Iranian LPG port, is owned by Golden Lotus Oil Gas.

For owners and managers involved in last year's events, it can have more far reaching effects than merely the freezing of assets on US soil, Larsen says. “You may have cascading effects. If you are caught in sanctions-busting, the enforcement put upon you [as owner] by US authorities can cascade further on, depending on the case”. 

Analysts at HawkEye360, the Virginia-based satellite company that develops capabilities in remote sensing and radio frequency (RF) satellite intelligence, says it found another LPG tanker, the OPEC ATHENA, involved in apparent US sanction busting behaviour in 2019.

The firm used a model to find transshipments. The affair involving the OPEC ATHENA, similarly to the case in April 2020, also includes Vietnam Gas And Chemicals Transportation, this time as an ISM manager of the vessel. IHS Maritime lists FGAS Petro as its owner and manager.

HawkEye360 cites evidence that the vessel visited Pars Petrochemical Port (port Asaluyeh), while turning off its AIS signal (in a similar fashion as the LAUREN did in 2020) and after anchoring in the UAE, it sailed to Dongguan, China where it arrived in December of 2019. 

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