OSG says tanker pool will halt Iran trade after sanctions

(Updates comment from DHT in eighth paragraph.)

Feb. 10 (Bloomberg) -- Overseas Shipholding Group Inc., the largest U.S. crude-tanker owner, said the pool in which its ships operate will no longer go to Iran after the European Union agreed to an embargo on oil from the Persian Gulf nation.

Tankers International LLC, which manages a pool of vessels from seven companies including OSG, told the New York-based company that the trade will end because of “regulations adopted by the European Union in late January 2012 and other factors,” Chief Executive Officer Morten Arntzen said in an e-mail today. Insurers are no longer able to cover such voyages, he said.

OSG “complies with all applicable laws and regulations concerning where and to whom OSG trades its vessels,” Arntzen wrote. “As these laws and regulations change, OSG will comply with the changes.”

The EU agreed Jan. 23 to a phased-in ban on the purchase, transport, financing and insurance of Iranian oil. The embargo still needs to be implemented by the European Commission, the bloc’s regulatory arm. The sanctions will extend to about 95 percent of tankers because they are insured under rules governed by European law, Andrew Bardot, the London-based secretary and executive officer of the International Group of P&I Clubs, said in an interview Jan. 26.

Shares of OSG fell 13 percent to $10.27 as of 12:25 p.m. in New York after the company said it would suspend dividends. OSG will report a loss of $178.6 million this year, compared with $204.4 million in 2011, according to the median of five analyst estimates compiled by Bloomberg.

Largest Shipbroker

Rates for very large crude carriers, each capable of carrying about 2 million barrels of oil, fell 10 percent to $28,291 a day this year, according to data from London-based Clarkson Plc, the world’s largest shipbroker.

Founded in 1948, OSG has 111 vessels and 3,500 employees, according to its website. Its 14 VLCCs are commercially managed by Tankers International, along with 31 ships from six other companies, according to the pool’s website. They include Antwerp-based Euronav NV and St. Helier, Channel Islands-based DHT Holdings Inc.

“All the owners in the pool have stated that they will not trade Iran because of the consequences,” DHT CEO Svein Moxnes Harfjeld said by phone. “DHT is complying with all relevant regulations and sanctions and following recent developments our vessels have been instructed not to trade Iran.”

Western nations are trying to curb Iran’s oil income in an attempt to stop the nation from developing nuclear weapons. The government in Tehran says its nuclear program is for civilian purposes. It is the second-biggest producer in the Organization of Petroleum Exporting Countries and had daily output of 3.55 million barrels in January, data compiled by Bloomberg show.

Oil sales earned Iran $73 billion in 2010, accounting for about 50 percent of government revenue and 80 percent of exports, the U.S. Energy Department estimates.

--With reporting by Michelle Wiese Bockmann in London. Editor: Alaric Nightingale, Stuart Wallace

To contact the reporter on this story: Isaac Arnsdorf in London at [email protected]

To contact the editor responsible for this story: Alaric Nightingale at [email protected]