China ship firm ends Iran work as Tehran feels more heat

Last Updated: Wed, Nov 21, 2012 17:50 hrs

* Iran shipping sector facing more pressure

* Certification vital for insurance and ports access

By Jonathan Saul

LONDON, Nov 21 (Reuters) - A Chinese firm has stopped verifying safety and environmental standards for Iranian ships, becoming the last top certification provider to end marine work there as the trade noose on Tehran tightens.

The China Classification Society (CCS) is the last of the world's top 13 such companies, all members of the International Association of Classification Societies (IACS), to confirm it has ended Iran-related certification work, key to insurance and ports access for ships.

China and other countries in Asia including South Korea continue to buy Iran's oil, but the loss of major ship certifiers has raised concerns over the quality of insurance cover and future maintenance of Iranian ships.

"Non IACS members do not have the global network to support ships anywhere in the world. So, if something might happen, the vessels are going to have to travel a further distance to get assistance," a ship industry source said.

"Without elite classification and insurance cover, you shudder to think what the implications of that are."

The IACS classes more than 90 percent of the world's merchant fleet. It is made up of the top 13 of the more than 50 agencies that classify vessels. CCS is among the top providers.

A letter seen by Reuters dated Nov. 15 showed Beijing-headquartered CCS had not provided certification services to Iranian ships since June 28. It had been urged to pull out by U.S. pressure group United Against Nuclear Iran (UANI) and clarify its position.

"Currently there is not any ship flying an Iranian flag or owned by an Iranian ship owner in our fleet, and we have not conducted any statutory survey for any Iranian ship," CCS chairman and president Sun Licheng said in the letter to UANI dated Nov. 15.

An official with CCS's international department confirmed it had sent a letter to UANI chief executive Mark Wallace.

"Wallace sent us an email and we issued a reply to them on Nov. 15," the official told Reuters on Wednesday.

When asked why they had taken the decision, the official said: "It has been clearly explained in our letter," declining further comment.

Despite the CCS move, China continues to be the biggest taker of Iranian oil - a vital revenue earner for Tehran.

"It is surprising to see CCS making this move but it could be a case of it being a publicly known entity. So, it seems like it's a perception issue," the ship industry source said.


A targeted campaign by UANI, which includes former U.S. ambassadors as well as former CIA and British intelligence chiefs on its board and is funded by private donations, has already led to other top classification societies exiting Iran.

Without certification from classification societies, vessels are unable to secure insurance cover or call at most international ports.

UANI's Wallace on Wednesday welcomed the move by CCS, but sought harsher measures being imposed on Iran's fleet.

"All of the world's major shipping certifiers have now ended their certification of Iranian vessels," said Wallace, a former U.S. ambassador to the United Nations.

"We call for even tougher sanctions: any vessel that docks in Iran or transports Iranian cargo should be barred from accessing ports in the U.S., EU, or elsewhere."

Iran's shipping trade has been battered by Western sanctions, aimed at pressuring Iran over its disputed nuclear programme. Shipping is reeling from a ban on insurance cover from Europe while many maritime authorities have de-flagged Iranian ships. Ship owners have also cut trade ties fearing the loss of business in markets such as the United States.

Earlier this month Hong Kong said it would stop allowing 19 ships linked to Iran's biggest cargo carrier the Islamic Republic of Iran Shipping Lines from operating under its flag.

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