To circumvent US sanctions on Iran, some cargo ships go off the grid
NEW YORK —A week ago, a small tanker approached the Persian Gulf after a 19-day voyage from China. The captain, as required by international rules, reported the ship’s position, course, speed, and another key detail: It was riding high in the water, meaning it was probably empty.
Then the Chinese-owned ship, the Sino Energy 1, went silent and essentially vanished from the grid.
It reported in again Sunday, near the spot where it had vanished six days earlier, only now it was heading east, away from the Strait of Hormuz near Iran. If past patterns hold, the captain will soon report that it is riding low in the water, meaning its tanks are likely full.
As the Trump administration’s sanctions on Iranian oil and petrochemical products have taken hold, some of the world’s shipping fleets have defied the restrictions by “going dark” when they pick up cargo in Iranian ports, according to commercial analysts who track shipping data and intelligence from the authorities in Israel, a country that backs the Trump crackdown.
“They are hiding their activity,” said Samir Madani, cofounder of TankerTrackers.com, a company that uses satellite imagery to identify tankers calling on Iranian ports. “They don’t want to broadcast the fact that they have been in Iran, evading sanctions. It’s that simple.”
A maritime treaty overseen by a UN agency requires ships of 300 tons or more that travel international routes to have an automatic identification system. The gear helps avoid collisions and aids in search-and-rescue operations. It also allows countries to monitor shipping traffic.
It is not illegal under international law to buy and haul Iranian oil or related products. The Trump administration’s sanctions, which went into effect in November after the United States pulled out of the Iran nuclear agreement, are unilateral.
But foreign companies doing business with American companies or banks risk being punished by the United States. Actions can include banning American banks from working with them, freezing assets, and barring company officials from traveling to the United States, said Richard Nephew, a research scholar at Columbia University who oversaw Iran policy on the National Security Council during the Obama administration.
“We have sanctioned dozens of Chinese state-owned enterprises for nuclear, missile, arms, and other forms of proliferation,” Nephew said. “But it is not entered into lightly.”
A State Department spokeswoman said, “We do not comment on intelligence matters.”
Brian Hook, the US special representative for Iran, told reporters in London on Friday that the United States would punish any country importing Iranian oil. Hook was responding to a question about reports of Iranian oil going to Asia, according to the Reuters news agency.
President Trump’s efforts to halt Iranian oil and petrochemical exports are at the heart of rising tensions between the two countries. Last month, he imposed new sanctions on Iran’s leaders after it downed a US surveillance drone and nearly precipitated a counterstrike that was called off at the last minute. The attack on the drone came a week after the United States accused Iran of being responsible for explosions that had crippled two tankers near the Strait of Hormuz.
US and Israeli intelligence agencies say Iran’s Revolutionary Guard is deeply entwined with its petrochemical industry, using oil revenues to swell its coffers. Trump has labeled the military group a terrorist organization.
Iran has been trying to work around the US sanctions by offering “significant reductions” in price for its oil and petrochemical products, said Gary Samore, a professor at Brandeis University who worked on weapons issues in the Obama administration.
When shipping companies defy the sanctions, they weaken their effectiveness, especially if the companies — or the countries where they are based — see no consequences, analysts said. Some shipping companies with direct Iranian ties do not try to hide their movements, according to data collected by the commercial tracking sites.
The Sino Energy 1 and its more than 40 sister ships are far more difficult to track when they go off the grid. They were owned until April by a subsidiary of Sinochem, a state-owned company in China that is one of the world’s biggest chemical manufacturers.
Sinochem has extensive business ties in the United States. It has an office in Houston and works with big American companies including Boeing and Exxon Mobil. In March, it signed an agreement with Citibank to “deepen the partnership” between the two companies, Sinochem said. In 2013, a US subsidiary of Sinochem bought a 40 percent stake in a Texas shale deposit for $1.7 billion.
In April, it sold a controlling share in its shipping fleet to a private company, Inner Mongolia Junzheng Energy & Chemical Group, whose biggest shareholder is Du Jiangtao, a Chinese billionaire who made his fortune in medical equipment, chemicals, and coal-generated power.
A person answering the phone at Junzheng’s investor relations office was not familiar with the newly acquired shipping business. For now, Junzheng owns 40 percent of Sinochem’s former shipping fleet, with the rest owned by two Beijing companies.
Frank Ning, chairman of Sinochem, speaking in a brief interview in Dalian, China, said shipping had not been central to the company’s business. In a statement, the company said it had “adopted strict compliance policies and governance on export control and sanctions,” though a former employee who had helped manage the shipping business, speaking on the condition of anonymity, said the company had shipped petrochemicals from Iran for years.
In some parts of the world, including the South China Sea, it is not uncommon for ships to go silent because the automatic identification system may be overloaded by the volume of vessels, said Court Smith, a former officer in the US Coast Guard who is now an analyst at VesselsValue. Sometimes they do so for competitive reasons, he added.
But in the Persian Gulf, where traffic is lighter, Smith said, vessels generally do not turn off the system, known in the industry as AIS.