US Sanctions on COSCO Companies Hit US-Listed Teekay

An LNG joint venture of U.S.-listed Teekay Group has qualified as a “blocked person” under sanctions imposed by the U.S. last week against two COSCO companies for allegedly transporting Iranian crude.

The sanctions were imposed on COSCO Shipping Tanker (Dalian) Co. and COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co.

As explained by Teekay, COSCO Dalian is a direct 50% shareholder in China LNG Shipping (Holdings) Limited (CLNG).

CLNG was not listed on the recent Office of Foreign Assets Control (OFAC) Order or otherwise directly implicated in any sanctioned activity, but by virtue of being 50% owned by COSCO Dalian, CLNG currently qualifies as a “blocked person” under OFAC rules.

CLNG, in turn, owns a 50% interest in Teekay LNG’s Yamal LNG joint venture, which owns four on-the-water ARC7 LNG carriers and two ARC7 LNG carrier newbuildings.

As a result of CLNG’s 50% interest, the Yamal LNG Joint Venture also currently qualifies as a “blocked person” under OFAC rules.

Teekay noted that it has not traded and would not trade with Iran, adding that it is working with partners on resolving the issue.

The company received the fourth ARC7 LNG carrier in August this year.

Responding to the development, Russian gas producer Novatek, who holds a 50.1% stake in the Yamal LNG project, said the project “has all the necessary capacities to ensure supplies of LNG produced to customers in accordance with contractual obligations within the agreed timelines.”

“The issue to resolve this situation is a business relations matter between Teekay LNG and China LNG Shipping (Holdings) Limited,” the company said in a statement.