Shell fined $2 million for ship carrying Iraqi oil

April 25, 2000
Web posted at: 8:33 p.m. EDT (0333 GMT)

WASHINGTON (CNN) -- Oil giant Royal Dutch/Shell Group has agreed to pay a fine of $2 million to the United Nations after a Russian oil tanker under contract to the oil giant was deemed to be illegally smuggling Iraqi oil in violation of a U.N. embargo, the Pentagon said Tuesday.

Tests conducted by U.S. officials determined about 20 percent of nearly 80,000 metric tons of oil aboard the Russian tanker Akademik Pustovoyt came from Iraqi oil facilities, according to Defense Department spokesman Ken Bacon.

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The tanker has been diverted to Oman's coastal waters in the Persian Gulf, where the cargo will be offloaded to another ship also under contract to Shell, Bacon said.

Bacon said there was no evidence that Shell willfully violated the embargo, part of the U.N. sanctions imposed on Iraq during the 1990-1991 Persian Gulf crisis. The ship's captain claimed he purchased the oil legally in Iran, and Shell Oil spokesmen said they believed the oil was being carried legally.

The $2 million Shell will pay in fines is roughly equal to the value of the smuggled oil, Bacon said. Shell will be allowed to retain ownership of the 78,000-metric ton cargo as part of the agreement, Bacon said. But he added that future cases may be treated more harshly, and the company may forfeit the oil.

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The total shipment is worth about $12 million, according to U.S. Defense Department officials. The government of Oman will release the ship to its Russian owners after the transfer of the cargo.

The money will go to a U.N. fund used to pay for ongoing interdiction operations intended to control the smuggling of Iraqi oil from the Persian Gulf, Bacon said.

The Akademik Pustovoyt was detained earlier this month, the second time this year that a Russian tanker has been held on suspicion of oil smuggling. In February, the U.S.-led enforcement mission detained another Russian tanker, the Volga-Neft 147. Tests determined the vessel was carrying Iraqi crude in violation of the embargo.

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Shell The Royal Dutch/Shell Group of Companies
United Nations
UN Monitoring Commission for Iraq
U.S. Department of Defense
The Iraqi Presidency
Iraq - Ministry of Foreign Affairs
ArabNet - Iraq

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