Iran is using an Indonesian port in a strategy to keep up sales to buyers in Asia in the teeth of Western sanctions, according to shipping data and industry sources, Reuters reported.
Two Iranian very large crude carriers (VLCCs) able to hold 2 million barrels each sailed to Batam Island in April, according to AIS ship tracking on Reuters, which tracks global tanker movements, before moving on to China.
U.S. and European sanctions aimed at pressuring Tehran's suspected pursuit of nuclear weapons have halved Iran's shipments, costing the government billions of dollars in oil revenue, since the start of 2012.
"Iran has been using this strategy for the past few months," said analysts at FGE, an energy consultancy. "The strategy is taking the crude to islands in Asia via VLCCs and selling it from there. It's a crucial stream of revenue for the country, so it's very important they sell as much as they can."
Batam Island is just 20 km (12 miles) off the south coast of Singapore, the continent's oil hub. Industry sources and oil traders said that before last year it was rare for Iranian tankers to ship crude there.
"I think it is a staging post and crude goes from Batam to China or whatever," said an official with a global oil company who declined to be named. "The Iranians can either keep the crude there, or leave it in the ground."
Iran has shipped oil via other islands in Asia to help maintain exports. In September, Reuters reported Iran was parking oil at Labuan before shipping it on to other destinations.
"They have used Labuan in Malaysia in the past, so there is nothing really to stop them using Batam as a base as there are no sanctions-related drawbacks," said a shipping industry source familiar with Iran's tanker fleet and its movements.
"All of this is too risky for the brokers in the West or most ship owners, but it's a live trade nonetheless."