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Iran's NITC storing crude on 2 tankers at sea

Tehran, November 25, 2010

Iran's biggest crude oil tanker operator, NITC, is storing Iranian crude on two very large crude carriers (VLCCs) and expects that number to fall as the winter demand for oil rises, its chairman said.

"At the moment only two ships are now allocated for storage," Mohammad Souri told Reuters Insider TV.

"They're special heavy oil, and therefore not many clients are buying that."    

"But they are not going to stay there forever...It (the number of storage tankers) is slowly decreasing. It was seven-eight maybe eight or nine months ago. It is falling with the winter demand," he said.   

A shipping source had estimated that NITC was storing crude on around seven VLCCs. A VLCC can store up to 2 million barrels of crude oil.

Traders had told Reuters late in October that the volume of Iranian crude stored at sea had fallen by as much as 4 million barrels because of a spike in Asian demand this month.

Souri said the tanker market was "not too good now" due to an oversupply of vessels resulting from lower-than-expected demand for crude.   

"We were estimating crude oil consumption would be in the region of 95 million barrels a day. Today it is around 85 million barrels a day. That gap has also affected the market," he said.   

While Souri was more upbeat about the outlook for 2011, he cautioned against being too optimistic.

"We think 2011 will be a better market than 2010, but not much better. We should not expect a high market," he said, adding that NITC was set to post a profit in 2010.   

"As long as there is a recession and there is a surplus of tonnage, even if you're breakeven or have a marginal profit, you are happy," he said.

Souri said sanctions imposed by the West on Iran's petroleum imports did not have any major impact on the group's business.   

He added that the company had no difficulty obtaining the financing it needs even though industry sources say banks are generally reluctant to provide cash to Iranian companies.
"We now have a credit of more than $3 billion in case we order new ships," he said. The company had ordered 22 new vessels to boost the number of its VLCCs to 50 by the end of 2012.   

But it has suspended a plan to build LNG vessels for now. "Because of the sanctions we have kept it quiet and we're not going to decide until further improvement on the sanctions part," he said.   

NITC was also hopeful that it secure insurance cover in the European Union, when its covers of four separate P&I clubs expire in February.

"Article 26 of regulation says those shipping companies registered in European Union countries, even though it has Iranian owners, they will not be affected," he said. "And NITC is one of them."    

In July the EU had imposed prohibitions on the provision of insurance and reinsurance in the bloc to the Iranian government and other entities.    

But in late October it said prohibitions would not apply to "the provision of compulsory or third party insurance to Iranian persons, entities or bodies based in the Union" -- a section which Souri was referring to.

"We have very friendly relations with everybody, more than 40 oil companies in the world. This friendship has been built in the 55 years and it's not easy to break it down," Souri said. - Reuters




Tags: VLCC | NITC | Iranian crude |

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