U.S. Waiver Offers Grace Period to Wind Down Business with COSCO Tanker Units

Photo courtesy Phil Kempsey

WASHINGTON, Oct 24 (Reuters) – The U.S. Treasury Department on Thursday issued a nearly two-month waiver for companies to wind down transactions with a Chinese tanker company it sanctioned last month for allegedly transporting Iranian oil.

The waiver, good through Dec. 20, allows “maintenance or wind down of transactions” including offloading non-Iranian crude oil involving COSCO Shipping Tanker (Dalian) Co. Ltd, according to a notice from the department’s Office of Foreign Assets Control.

The Trump administration imposed sanctions in late September on four Chinese shipping companies including COSCO Shipping Tanker (Dalian) for allegedly transporting oil from Iran.

Concern about the sanctions caused shipping costs for oil and liquefied natural gas to more than double around the globe.

The Treasury Department said Thursday’s waiver applies to COSCO Shipping Tanker (Dalian) or any entity owned 50% or more by the company.

The waiver does not authorize any transactions or activities with COSCO Shipping Tanker (Dalian) Seaman and Ship Management Co, Ltd, the department said.

Earlier this month a source told Reuters a supertanker owned by COSCO Shipping Tanker (Dalian) received a temporary waiver from U.S. sanctions that allowed it to discharge oil cargoes.

The very large crude carrier (VLCC) Coswisdom Lake discharged some crude in Singapore and the remainder in Brunei, shipping data on Refinitiv Eikon showed.

The sanctions were to resume after the cargoes were discharged, the source said.

Sanction waivers were also being sought for a very large crude carrier carrying U.S. oil to South Korea, the source added.

Daniel Pilarski, a partner at the Watson Farley & Williams law firm, said the fact that there was no wind down license when the Treasury Department imposed the sanctions in September “really threw the market into a bit of a panic.” Still, he said, issuing the license now is of “some limited utility” for companies winding down ongoing transactions with the tanker company until the license expires in December. (Reporting by Timothy Gardner Editing by Tom Brown and Sandra Maler)

(c) Copyright Thomson Reuters 2019.

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