New York: Iran, faced with stringent Western economic sanctions for its alleged nuclear weapons programme, is loading hundreds of thousands of barrels of unsold oil to its ships after concealing their true identity, according to a media report.
A fleet of about 65 Iranian tankers are serving as floating storage facilities for Iranian oil in the warm waters of the Persian Gulf, each one given a nautical makeover to conceal its origin and make a buyer easier to find, the New York Times reported.
The paper cited one such ship, The Neptune, which it said had been floating in the Persian Gulf for a month.
Iran, OPEC`s second largest oil exporter, has been reluctant to reduce its production, fearing that doing so could damage its wells.
"But Iran has insufficient space to store the crude it cannot sell. So while it furiously works to build storage capacity on shore, it has turned to mothballing at sea," the report said.
"We have never seen so many just waiting around," the paper quoted Rostam, a fisherman and smuggler who regularly works these waters as saying.
International oil experts say Iranian exports have already been cut by at least a quarter since the beginning of the year, costing Iran roughly USD 10 billion so far in forgone revenues. Many experts say the pain is only beginning, since oil prices have been falling and Iran`s sales should drop even more with the European embargo that went into effect on Sunday.
The drop in crude sales has hit Tehran with multiple challenges. Besides the financial impact, Iran has to figure out what to do with all the oil it continues to produce. Iran is pumping about 2.8 million barrels a day ? already down about one million barrels daily since the start of the year. But it is exporting only an estimated 1.6 to 1.8 million barrels a day, the report said.
The unsold crude is being stored in what has been estimated to be two-thirds of the Iranian tanker fleet. Most of the ships are sailing in circles around the Persian Gulf as Iran tries to sell the mostly heavy crude at bargain-basement prices, it said.
International oil experts estimate that Iran is now warehousing as much as 40 million barrels -roughly two weeks of production - on the tankers. An additional 10 million barrels are in storage on shore.
Iranian oil exports have declined steadily from the 2.2 million bpd average in 2011, as its main oil buyers cut imports to comply with stringent US and European Union sanctions imposed due to concerns the country is attempting to build a nuclear bomb. Iran says its nuclear programmes are for peaceful purposes.