Friday, September 28, 2012

Vitol defies Sanctions on Iran

He looked at me and responded that he believes in what we do and so do his men. He does not have a family of his own and dedicated his life to serving the cause, but he tells me about his sister and her family. He has two young nieces, twins and he wants to be part of our project in order to create a better world for them. That is why he is willing to give his life for it.

He goes on and tells me that is why he is willing to die for me as he knows I am the mastermind of the new world financial and economic system and that he and his men will protect me at all costs should another attack happen. He asks me to make him and his team a permanent part of my security. He stands up and salutes me with a sense of pride which is hard to find. From this day one they will follow my every command without hesitation. 

I asked him why his team and he are willing to obey my commands without hesitation and his response was respect.Trust and respect. I stand up and return the salute before I dismiss him with his first task. Hist task will be difficult as the capture of the escaped assassin is hi primary target while ensuring security. He tells me to consider it done.

As he leaves my office another report concerning Iran is being handed to me. Updates come in faster than I can conduct my interviews with my security personnel. This time it has to deal with Vitol, the world's biggest independent energy trader. Iran suffers, rightfully so, from various sanctions which include a ban on trading Iranian oil in order to cut the primary revenue stream for the regime and its nuclear ambitions.

Vitol found a way around the sanctions and is offering Iranian oil to Asian traders, China in particular. Vitol purchased two million barrels of Iranian fuel oil which is usually used in power generation and offered it to Chinese traders. Vitol denies accusation and said they are in compliance with international laws and sanctions against Iran.Vitol is based in Switzerland which does not subscribe to sanctions against Iran.

Vitol issued a statement where it claims one of it subsidiaries in Bahrain bought fuel oil from a non-Iranian company in July and that the oil was of Iranian origin, but that it has suspended all oil trades with the regime. The company has stopped trading Iranian oil from its European trading terminals, but reports indicate that its Middle Eastern terminals continue to trade with Iranian oil. The Swiss government declined to identify if Vitol sought permission to trade Iranian oil due to commercial secrecy laws, but Swiss as well as EU regulations and laws do not apply to the Bahrain terminal.

Of course the economic socialists and corporate communists call for Switzerland to tighten regulation and choke of business. Leaders in idiotic regulation demands is Swiss NGO The Berne Declaration. Vitol's biggest competitors, Glencore and Trafigura, stated that hey have halted trade in Iranian oil. The sanctions as well as the reduction of purchases in the amount of 20% by China, India, Japan and South Korea have cut oil revenues in half for Iran. The reduction in oil purchases was caused by threats of U.S. financial sanctions on companies from those four countries which are the top four purchasers of Iranian oil. 

Vitol posted $297 Billion in revenues in 2011 and does not disclose profits. Fuel oil accounted for only $24 Billion in revenues while crude oil grossed the company $105 Billion and other refined products an additional $100 Billion. Profit margins on oil trades are low, but given the difficulty to get Iranian oil sold most lieely translated into huge profits for Vitol.

Vitol was very smart about how it succeeded into selling Iranian fuel oil

1. The Leadership has left Iran's top oil terminal at Kharg Island on August 23rd and passed through the Strait of Malacca before it turned off its freight tracking system on September 4th off the coast of Malaysia.Iranian tankers have started to turn off their black-box transponders after sanctions were announced in order to avoid tracking.

2. Vitol purchased two million barrels of fuel oil from the INTC vessel The Leadership off the coast of Malaysia and loaded it onto a Vitol chartered tanker, the Ticen Ocean. The Ticen Ocean was charted from Titan Petrochemicals, a Hong Kong based company which hired the vessel from Norwegian based company Frontline.The vessel was charted for floating storage of the Malaysian port of Tanjung Pelepas. Frontline CEO stated that Titan assured the company that no Iranian oil is being stored on the Ticen Ocean.

3. Vitol then charted a second vessel, the Speranza which is owned Sino Shipping Holdings based in China, which arrived off the Malaysian coast on September 13th or September 14th in order to replace the Ticen Ocean as floating storage. The Iranian fuel oil was transferred a second time in order to conceal its origins. 

4. Vitol also transferred part of the Iranian oil to a third vessel, the Kamari I, between September 11th and September 12th. The Kamari I transported the Iranian fuel oil to Vitol's onshore storage facility on the Malaysian island of Tanjung Bin which is located inside the Tanjung Pelepas port according to sources on the ground.

5. Vitol then blended the Iranian fuel oil with fuel oil from Europe and marketed it as a special blend to Chinese oil traders for the countless small, independent Chinese refineries known as teapots. Vitol asked a $30 premium to the benchmark, the Singapore 180 Centistoke Fuel Oil, which valued the two million special blend at roughly $250 Million.

6. The price was too high according to a Chinese manager for one of the teapots who said talks did not contnue and that Vitlol did not seem in a rush to sell the cargo. Given the unknown quality f the special blend, Chinese traders refused to purchase the cargo as it was too risky for them. 

7. Two Asian refineries were offered the special blend cargo and stated that Vitol asked for a $12 to $14 premium which valued the cargo at $175 Million.

It is unknown if Vitol successfully sold the cargo or if it still seeks a buyer. It does show the intelligence involved on Vitol's part to create a business avenue which will allow the company to increase profits. I finish the report and I am equally impressed and furious about Vitol. I may have to take this issue directly to our FWF unit, but given that Vitol is a private company it will make the task a lot more challenging. 

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