Oil Trader Facing Criminal Trial Over Disguised Iranian Crude

A financier and trader, who’s now one of the most active dealmakers in UK oil, is among individuals facing the prospect of a criminal trial in Milan for fraud over the attempted delivery of a consignment of crude from Iran.

Author of the article:

Bloomberg News

Alberto Brambilla, Laura Hurst and Jonathan Browning

Published Oct 05, 2023 • 2 minute read

An Iranian national flag flies at the Persian Gulf Star Co. (PGSPC) gas condensate refinery in Bandar Abbas, Iran, on Wednesday, Jan. 9. 2019. The third phase of the refinery begins operations next week and will add 12-15 million liters a day of gasoline output capacity to the plant, Deputy Oil Minister Alireza Sadeghabadi told reporters. Photo by Ali Mohammadi /Bloomberg

(Bloomberg) — A financier and trader, who’s now one of the most active dealmakers in UK oil, is among individuals facing the prospect of a criminal trial in Milan for fraud over the attempted delivery of a consignment of crude from Iran.

Francesco Mazzagatti faces accusations from Italian prosecutors that his former oil trading business Napag disguised hundreds of thousands of barrels of crude as Iraqi oil before it was shipped by Eni SpA’s trading unit in a potential breach of US sanctions, according to a court document seen by Bloomberg. Milan prosecutors said the executive is among five individuals and three companies that may stand trial over the 2019 “White Moon” incident named after the tanker carrying the cargo, according to the document.

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A pre-trial hearing started behind closed doors on Thursday and a judge will now decide whether to hold a full trial. The case stems from complaints made by Eni to Milan prosecutors after the Italian oil giant was forced to return the shipment of about 700,000 barrels of oil after laboratory results confirmed that the crude wasn’t the Iraqi grade the company had expected. Eni shipped the cargo all the way to the Sicilian port of Milazzo, where it has a refinery, before having to transport it back to the Middle East, a round trip of about 10,700 miles.

“This is a procedural pre-trial hearing, related to false and outdated claims concerning a previous business that Mr. Mazzagatti is no longer in any way associated with, either directly or through current business ventures,” Mazzagatti’s spokesperson said in an email. “There has been no wrongdoing on his part and he has not been notified of any ongoing investigation against him, as mandated by Italian law.”

In addition to Mazzagatti, the prosecutors also accused former Eni officials and a Napag executive of conspiring to hide the true origin of the cargo. Eni’s ex-oil trading chief Massimo Mantovani and another former senior trader are accused of having allowed the delivery of the oil via ship to ship transfers. They also chose to make payments in euros rather than US dollars to “avoid US authorities tracking payments,” prosecutors said. They all deny the claims.

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Eni declined to comment on the hearing. Mantovani’s lawyer didn’t respond to a request for comment.

The oil was sold to Eni by a series of firms including Napag Trading Ltd. Napag denied “it was aware or had any suspicion that the oil cargo loaded onto the tanker originated from Iran,” the lawyers said at the time.

Mazzagatti is now among the most acquisitive oil dealers after pivoting to the UK with a string of purchases of wells and fields in the North Sea, spending almost half a billion pounds on deals. He’s now pursuing an even bigger prize, for gas fields owned by Shell Plc.

The $1 Oil Field Sale That Landed an Italian Financier in Court

His new company, Viaro Energy Ltd., is accused by a joint-venture partner in the UK of orchestrating a move to pay itself an allegedly illegal dividend. Mazzagatti has denied the claim.

—With assistance from Katharine Gemmell.

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