As it reached its historic nuclear agreement with world powers earlier this week, Iran has been hiding millions of barrels of oil it never reported to the United States or in the world oil market, according to an Israeli company that has developed sophisticated maritime tracking technology.
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Windward claims that Iran is currently storing 50 million barrels of crude on tankers in the Gulf, a much larger amount than estimates from Western sources. Bank of America has estimated Iran is holding 30 million barrels, while the U.S. news broadcaster CNBC put the number at 40 million.
“The Iranians are taking huge, 280-meter-long ships and filling them with oil, to sit at sea and wait. Because the sanctions allow for production of only three million barrels a day, they began storing the remainder,” Ami Daniel, Windward founder and cochairman, told TheMarker. “Oil tankers have been sitting in the Gulf for anywhere between three and six months, just waiting for orders. Before we launched the website, no one really knew how much oil they had stored up.”
With the world’s fourth-largest oil reserves, Iran denies it’s storing oil at sea, despite reports that surfaced in The New York Times as early as 2012.
According to Windward, the Iranian ships are purposely hiding their cargo.
According to Windward, the amount of oil Iran is storing offshore has jumped more than 150% over the last year to over 51 million barrels as of Wednesday. The increase coincided with nuclear talks with world powers led by the U.S. while Iranian President Hassan Rohani publicly claimed Iran did not have enough oil to fulfill its own needs.
The amount of oil Iran is holding is far larger than the daily quota of 30 million barrels imposed by the Organization of the Petroleum Exporting Countries on its members.
Oil and petrochemical sales, which once accounted for more than 90% of the Islamic Republic’s exports, dropped by 60% after strict sanctions were put into place in 2011. Most of the drop was due to a complete halt of oil exports to Europe, which had amounted to 600,000 barrels a day. Iran currently produces 3.3 million barrels of oil daily, according to the U.S. Energy Agency, slightly more than the three-million-barrel ceiling stipulated by the sanctions, which allow Iran to export no more than one million barrels a day.
Limitations were also placed on Iran’s oil-storage facilities, which Tehran apparently circumvented with the offshore storage scheme. The amount of oil involved is quite extensive: Annually, Iran pumps 1.204 billion barrels of oil, meaning the offshore oil stores reported by Windward account for 4.2% of Iran’s yearly production. In total, there are 28 Iranian tankers in the Gulf, each holding between one and two million barrels, according to Windward.
Offshore oil storage was only one way Iran circumvented the sanctions regime in recent years, helping it to provide financial support for the Lebanese militant group Hezbollah and the embattled Syrian president, Bashar Assad, and ramp up its involvement in Yemen’s civil war.
Under the accord reached this week, sanctions on Iran will continue until the end of the year, after United Nations inspectors verify whether Iran is honoring the terms of the nuclear agreement. The amount of oil the Islamic Republic is hiding, however, could be sold under the West’s radar, or sold all at once as soon as the sanctions are lifted – a move that would weigh on already low global prices for oil.
Another advantage to offshore storage is that Iran can sell the oil quickly. Last Monday, 24 hours before the nuclear agreement was signed, the amount of oil stored in the Gulf fell from 54 million barrels to 51 million. “One ship left the Persian Gulf for Singapore overnight,” said Daniel, based on information collected by Windward.
Was the information about the hidden Iranian oil stores known to the Americans and Europeans as they signed the historic agreement?
Daniel: “I don’t know. We didn’t send the information to any governments.”
Is it safe to assume American or Israeli intelligence agencies have such information?
Daniel: “I’m unaware of such accurate measuring technology, and I haven’t heard of technology similar to ours. No one can say what kind of effect this amount of oil will have if it hits the market after sanctions are removed. There aren’t many large oil players in the world, but Iran is one of them.”
‘DNA for every ship’
Windward was founded in 2011 by Daniel and Matan Peled, both former Israel Navy officers, as well as Ariel Raunstien, who is now chief technology officer. Their company analyzes world maritime data in real time, monitoring cargo ships and cargo, using advanced technology and algorithms that can identify irregularities within immense quantities of satellite data and information from databanks.
“A hedge fund wants to know if the exchange rate for the Chinese yuan will go up or down, and we accurately present the amount of goods en route to China by sea – this [might] show a sharp slowdown of raw materials reaching the country, different than the amount reported by the Chinese government,” says Daniel, giving an example of Windward’s services.
Daniel says the idea behind Windward is to digitally organize all maritime data, which until recently relied on outdated, analog methods. “Every day, we analyze over 100 million data records from around the world, then we clean up those records – because there is a great deal of inaccurate information. We build a kind of DNA for every ship on the sea – what each ship did over the last few years. We use technology that was developed for intelligence purposes, which is highly accurate when it comes to identification and manipulation.”
Windward provides its services to both private organizations and governments, including Israel’s. The company has 40 employees and is looking to double that over the next year. In April, Asian billionaire Li Ka-shing’s venture capital firm, Horizons Ventures, invested $10.8 million in Windward. In 2013, Windward raised $5 million.
The company does not disclose its worth or earnings, but says it has tripled its income every year over the last three years.