* Iran exports nearly 18 mln barrels in Q1, up 12.5 pct on
* Figures show Iran is able to get round Western sanctions
* Middlemen and officials adopt creative ways to keep up
By Luke Pachymuthu
SINGAPORE, April 10 Iran exported nearly 18
million barrels of fuel oil in the first quarter, or around
200,000 barrels per day, an increase of nearly 12.5 percent from
the previous quarter, according to traders and data from Thomson
Reuters Oil Analytics.
The figures show that Iran's fuel oil exports remain healthy
despite tougher Western sanctions aimed at restraining the
country's nuclear ambitions, although the measures have more
than halved its exports of crude oil over the past
Iran's market-savvy officials and Gulf-based middlemen have
adopted creative strategies to get around the sanctions, from
using ship-to-ship transfers, to discharging and loading at
remote ports and blending Iran's fuel oil with other fuels to
hide its origin.
Sales of fuel oil through direct sales agreements between
the National Iranian Oil Company (NIOC) and buyers were pegged
at 7.8 million barrels, according to at least one Iran-based
shipping source familiar with the country's fuel oil exports.
Average monthly exports through direct sales between January
and March were 2.6 million barrels, or 86,666 barrels per day
(bpd), with exports despatched from the country's largest oil
export terminal at Kharg Island, the source said.
"We are seeing roughly steady shipments from Kharg Island
monthly, it's done in 2 or 3 shipments," said the Tehran-based
source, who declined to be identified due to the sensitivity of
the Iran oil export data.
Iran's first-quarter total exports of fuel oil rose around
74 percent from the corresponding period in the previous year
and were up nearly 79 percent over the same quarter in 2011,
Reuters data showed.
According to Thomson Reuters Oil Analytics, Iran's total
fuel oil exports were 9.8 million barrels, or 108,888 bpd, in
the first quarter of 2011 versus the 17.55 million barrels in
the same quarter this year.
First-quarter indirect sales of Iranian fuel oil, which is
oil resold to independent trading companies based outside Iran,
totalled about 9.75 million barrels.
Exports were carried out mostly through ship-to-ship (STS)
transfers just inside international waters, the source said.
"NIOC fills up the large supertankers at Kharg Island, and
once they are fully laden, they move into international waters
for the transfer operations," said one shipping source familiar
with the operations.
"There is no way of tracking these ships, their radars are
turned off, and the daughter vessel is usually an old junk."
Most Iranian cargoes were destined for Singapore, Asia's
largest trading and blending hub, and Fujairah in the United
Arab Emirates (UAE), one of the world's top bunkering hubs.
Such sales are supported by tankers assigned specifically to
shuttle into export terminals such as Bandar Abbas and Bandar
Mahshahr to load the oil and then re-export it via ship-to-ship
transfers outside the port of Fujairah in the United Arab
Emirates (UAE), sources said.
Some cargoes were bought by Middle East traders involved in
marine fuel sales and the rest was sold to buyers in Southeast
Asia and North Asia, traders familiar with the purchases said.
"Redocumentation of the cargoes takes place throughout the
supply flow chain, and by the time it gets to the discharge
port, the origin of the oil is untraceable," a trader said.
"Along the way some blending takes place and the molecules
change, so the structure of the oil gets altered and it becomes
harder for anyone to really say definitively that this oil came
The larger exports of better-quality Iranian fuel oil
weighed on the Asian market, traders said.
This drove the price differential between the two fuel oil
grades, of 180-centistoke and 380-centistoke viscosity, to a
four-year low of $1.25 on Feb. 26.
That was the lowest since Oct. 1, 2009 when it was 75 cents,
according to data from Thomson Reuters Oil Analytics.
The spread averaged $2.35 a tonne for February, versus the
2012 full-year average of $11.17 a tonne, the data showed.
"Because the market was oversupplied with high value
blending materials like Iranian straight-run, there was a real
disconnect between the 180 cst and 380 cst grades," a
Singapore-based trader said.
"You never see 380 cst being valued higher than 180 cst, but
that is what happened. It's like telling a whisky drinker he can
have a Blue Label for the price of a Red Label, who wouldn't
(Reporting by Luke Pachymuthu; Editing by Clarence Fernandez)