Kenya’s cooking gas fears as Oman flags Tanzania cargo

Oman has flagged the source of liquefied petroleum gas shipped into Tanzania, raising fears that some of the cooking gas used in Kenya could be from sanctioned countries, including Iran. The National Oil Company of Oman disowned ships ferrying cooking gas to Tanzania, arguing the cargo did not originate from its port— Sohar. The United States reinstated…

Oman has flagged the source of liquefied petroleum gas (LPG) shipped into Tanzania, raising fears that some of the cooking gas used in Kenya could be from sanctioned countries, including Iran.

The National Oil Company of Oman (OQ) disowned ships ferrying cooking gas to Tanzania, arguing the cargo did not originate from its port — Sohar.

This has sparked fears that the cargo could have originated from Iran, which has been smuggling oil and gas in the wake of US sanctions on its petroleum products.

Kenya receives a significant share of its cooking gas from Tanzania through the border towns of Namanga and Loitoktok.

The energy regulator has declined to clear the application by Taifa Gas, which is owned by tycoon Rostam Aziz, to set up a gas plant at the Mombasa port, citing risks to the environment posed by the 30,000-tonne gas handling facility.

The United States reinstated economic sanctions on Iran after President Donald Trump abandoned a landmark nuclear deal in May 2018. The sanctions bar US companies from trading with Iran, but also with foreign firms or countries that are dealing with Tehran.

“There were no exports of LPG in the months of February, March and April 2022 from Sohar Port, Oman. Hence claims by the vessels Serenity Gas, Glory Harvest, Falcon that the product on the respective vessels was shipped on board at Sohar are false,” OQ says in a letter.

Documents seen by the Business Daily show one of the ships with 3.005 million tonnes of LPG meant for the East African market and which came through Tanzania indicated the cargo originated from the Port of Sohar in Oman in March.

Importers and oil companies have turned to under-hand ways to smuggle petroleum products from Iran. Oil exports are the single largest foreign exchange earner for Tehran.

The smuggling involves elements of the Iranian state, notably the Islamic Revolutionary Guard Corps (IRGC), and private shipping companies based in Persian Gulf countries, according to analysts specialising in the energy industry and regional security.

Because of the profit margins, this trade was highly lucrative even before the United States pulled out of the nuclear deal. Iran has some of the world’s cheapest fuel prices thanks to very low production costs, heavy government subsidies and a weak currency.

But the reimposed economic sanctions have given this business a further boost as smugglers seek to evade restrictions on Iranian oil exports.

In addition to the nighttime transfers at sea, Iranian diesel bound for international markets is exported on tankers setting sail from Iran with the origin of the shipment forged to make it look as though it came from Iraq or the UAE.

The smuggling tactics include storing oil in large tankers at sea while identifying potential buyers for the commodity and switching off wireless communication devices that are used to monitor ship movements, making vessels from Iran invisible.

Other avenues used include registering and sailing ships under a foreign nation’s flag (reflagging) and changing the unique identification codes—to evade international tracking systems.

Port of Sohar is a prime target for companies smuggling Iranian oil given its proximity to the Strait of Hormuz that lies between the Omani Musandam Peninsula and Iran.

OQ is the sole exporter and distributor of refined petroleum products from the Port of Sohar and says that it did not load any LPG cargo between February and April.

The stance by OQ contradicts the declaration by a gas and oil company in East Africa that it sourced one of its LPG cargoes from the Port of Sohar in March.

Revelations of falsified documents by the East African firm has lifted the lid on the continued smuggling of Iranian products through the Strait of Hormuz, where over 20 percent of the refined fuel used globally passes.

The smuggling involves elements of the elite political class, Iranian state and private shipping companies based in the neighbouring Persian Gulf countries.

Refined fuel from Iran is considered some of the cheapest in the world due to low production costs, heavy government subsidies and a weak currency, offering smugglers and oil firms incentives to smuggle the commodity.

At the centre of the illegal trade is the Islamic Revolutionary Guard Corps (IRGC) — a branch of the Iran military that the US has accused of profiteering from the smuggling of refined petroleum products.

The US had in 2015 eased the sanctions on Iran after the inking of a deal where Tehran pledged to scale down on its nuclear weapons programme.

But Washington pulled out of the 2015 deal and re-imposed the sanctions in four years ago. Other factors behind the sanctions include Iran’s support for Hezbollah, Hamas and Palestine Islamic Jihad— groups that the US considers terrorist organizations.

Countries that use Iranian oil are subject to undisclosed sanctions by the US, placing Kenya and Tanzania on a collision path with Washington.

SOURCES: Business daily

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