It looks like the general license issued in regards to the Transitional National Council of Libya (TNC) by the United States Department of the Treasury Office of Foreign Assets Control (OFAC) is already being put into use. The MT Equator tanker, which is currently carrying up to 550,000 bbl of Libyan crude, will be arriving in Singapore for refueling on Apr. 28, before steaming on to China.

The MT Equator, chartered by Geneva-based oil trader Vitol SA, arrived in early April in the rebel-held port of Marsa el-Hariga in eastern Libya, aiming to take on up to 1 million bbl of oil for export. The tanker left Marsa el Hariga 3 weeks ago, and is headed for either Ningbo or Dalian, both Chinese ports.

Although the buyer of the MT Equator’s cargo was not readily ascertainable, a number of traders are worried about legal complications related to international sanctions targeting Libya and its petroleum trade. However, the TNC, with the help of Qatar, has been engaged in the export of limited quantities of crude oil and is seeking international assistance to continue overseas shipments.

The TNC received some assistance from OFAC this week, when a general license was issued to allow for U.S. persons to engage in transactions involving Qatar Petroleum or Vitol and the TNC, provided the interested Libyan parties are under the control of the rebel-backed leadership. OFAC did add some constraints, however, by imposing a 30 day reporting requirement detailing the arrangements of these transactions. These reports will aid OFAC in determining whether the transactions being engaged in under the general license are not violating the sanctions targeting the Government of Libya and the Qaddafi’s.

In addition,to the general license, OFAC has stated that specific license authorization to trade in hydrocarbon fuel as well as authorization to support or facilitate the trade in such hydrocarbon fuel can be obtained, so long as the hydrocarbon fuel is exported under the auspices of the TNC.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.