HK ignores US sanctions on Iran as tanker heads east

The Hong Kong government has ignored a warning from Washington about letting an oil tanker carrying petroleum from Iran stop in the city.

Hong Kong’s Commerce and Economic Development Bureau said that other than sanctions endorsed and promulgated by the United Nations Security Council which Hong Kong had always abided by, the city did not have any obligation to execute US sanctions against another country.

The UN had not imposed any restrictions on the export of petroleum from Iran, said the bureau.

“Certain countries may impose unilateral sanctions against certain places on the basis of their own considerations. Those sanctions are outside the scope of the UN Security Council sanctions implemented by the Hong Kong government,” read a statement.

The bureau added that it had always consulted the Chinese foreign ministry on enforcing UN sanctions against Iran.

It is understood that the US Consulate General in Hong Kong approached local officials on Wednesday and warned that the city must not offer any services to any vessels carrying goods from countries sanctioned by the US. A tanker, the Pacific Bravo, fully laden with Iranian oil, was believed to be en route to the city.

The tanker is owned by China’s Bank of Kunlun, a China National Petroleum Corp (PetroChina) subsidiary also sanctioned by the US in 2012 for acting as the main conduit for deals with the Islamic Republic.

The bank has since switched to Euro and Chinese yuan to settle its payments. China is a top buyer of Iranian oil and nearly all its oil payments go through the bank.

Also some reports, including those by Reuters and Bloomberg, noted that the tanker had changed course to skip its original destination of Indonesia on Monday and docked in Sri Lanka instead. It had then set sail again on its way to the Strait of Malacca, likely to East Asia.

Hong Kong’s Marine Department said on Wednesday evening that it “has no information showing if the respective vessel will enter or pass by Hong Kong waters.”

In April, US President Donald Trump stepped up measures to cut off Tehran’s oil exports – pillars of the country’s foreign exchange reserves – and scrapped waivers granted to key buyers including China, which has shrugged off US sanctions all along.

Washington reinstated sanctions against Iran’s oil industry in November, but allowed some buyers limited purchase quotas under a waiver program that expired on May 1.

“Anyone who does business with this ship, the Pacific Bravo, would be exposing themselves to US sanctions,” a senior American official said.

Earlier this month, a tanker called the Marshal Z carrying 130,000 tons of Iranian fuel oil unloaded its cargo at the Port of Ningbo-Zhoushan in the eastern Chinese province of Zhejiang.

Nonetheless, China has been importing less oil from Iran this year, about 500,000 barrels per day compared with a total of 800,000 barrels per day in 2018, representing a mere 5% of China’s total oil imports, according to Reuters.

It remains to be seen if Hong Kong’s latest rebuff risks souring the city’s ties with Washington further, following the talks by US politicians and lawmakers to scrap preferential trade treatment and separate customs jurisdiction recognition in light of the declining freedom and human rights protection in the former British colony.

US diplomats stationed in the city, now a special administrative region under Beijing, are also accused by the Chinese foreign ministry of leading a chorus of Western envoys and businessmen against a contentious amendment bill being proposed by the city’s government to allow rendition of fugitives to face trial or jail in mainland China.

US officials have also reportedly expressed frustration over Hong Kong’s slack execution of sanctions against Iran and North Korea, prodding the city to beef up enforcement, with an emphasis on scrutinizing locally-registered shell companies with covert business ties with the two regimes.

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