Iran Economy NewsLloyd's Register withdraws from Iran due to sanctions

Lloyd’s Register withdraws from Iran due to sanctions

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Reuters: Lloyd’s Register, a leading maritime risk management firm, has shut its operations in Iran and can no longer vouch for the safety of the OPEC member’s fleet due to Western sanctions, the head of the company told Reuters.

By Randy Fabi

SINGAPORE (Reuters) – Lloyd’s Register, a leading maritime risk management firm, has shut its operations in Iran and can no longer vouch for the safety of the OPEC member’s fleet due to Western sanctions, the head of the company told Reuters.

Lloyd’s Register, a classification society that verifies the safety and environmental standards of vessels, has stopped assessing around 60 tankers and container ships owned by Iran’s NITC and Islamic Republic of Iran Shipping Lines following pressure from the United States.

The company joins a broad spectrum of industries, from banks and insurers to refiners and shipowners, that have been forced to cut their ties to Iran because of tightening Western sanctions. The United States and Europe are trying to squeeze the revenues Iran makes from its oil exports to force it to halt a nuclear programme they fear will be used to make weapons, but which Tehran says is for power generation.

“The Americans came to us and said that if we continued to work for the Iranians we would be blacklisted in America,” Richard Sadler, the London-based chief executive of Lloyd’s Register, said on the sidelines of a conference in Singapore.

“There was a lot of confusion about the sanctions and actually the recommendations was that it was better for British classification societies within Europe not to be dealing directly with NITC,” he said.

U.S. senators introduced legislation last year barring classification societies from operating in the United States if they also conducted business in Iran. The bill has not been approved by any chamber of the U.S. Congress.

Classification societies are hired by shipowners to regularly check that vessels, from their hull and propulsion systems to the machinery and appliances, meet international safety standards. Under international conventions, it is required for a ship to be classed when docking at major ports.

Iranian ships have signed up with other classification societies in Europe for now to continue shipping crude and other cargo. As Western sanctions tighten, Iran may struggle to find societies to cover their ships.

Lloyd’s Register has lost around 3 million pounds in annual business from its withdrawal from OPEC’s second-largest oil producer.

There are more than 50 agencies that classify vessels, but not all are members of the International Association of Classification Societies, which classes more than 90 percent of the world’s merchant fleet.

Sadler questioned the effectiveness of sanctions that prohibited companies from ensuring the safety of vessels from Iran.

“With a company like ours that is devoted towards protection of life and environment, is it really sensible to take us out of the high-ranking classification societies? What advantage to the world is that?” he said. “Don’t use safety as a political tool against the Iranian society.”

Tighter Western sanctions are also forcing shipowners to take greater risks to maintain operations in Iran.

Indian shipping firms will continue to transport Iranian crude even if limited insurance coverage due to European sanctions leave them financially exposed to a spill or accident, a top executive and industry sources told Reuters.

(Editing by Manash Goswami and Ed Davies)

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