Tuvalu has acquired a fleet of super-tankers but in flag name only.

Reuters Freight Fundamentals reported that National Iranian Tanker Company had flagged 11 of its tankers, including seven large crude carriers, to Tuvalu.

They have also renamed the Tuvalu tankers, switching VLCC Hoda to Precious, and other ships to European sounding names: Pioneer, Lena, Truth, Motion, Brawny and Blossom.

The European Union will next week ban all Iranian oil imports as international sanctions increasingly bite over Iranian failure to allow international inspectors to verify its nuclear programmes.

Merchant ships need a flag from national ship registries to gain access to most of the world's ports. Flags of convenience (FOC) allow shippers to avoid more stringent maritime and employment regulations of major nations.

In the case of the tankers if any are involved in accidents, Tuvalu one of the world's poorest states, would be powerless to pay compensation or help clean up.

Earlier this year Tuvalu nearly ran out of fresh water and only survived with New Zealand help.

Little of the inside workings of Tuvalu's FOC operation is known. It is run by Singapore based Sovereign Ventures and before the Iranian deal was worth around A$300,000 (NZ$381,000) a year to Tuvalu.

According to the Tuvalu ship website the advantages of flying Tuvalu's flag include special discounted fees for fleet flagging and for older ships.

They offer a fast and convenient internet service that does not require lawyers.

"There is no restriction on the nationality of ownership. There is no restriction on the nationality of officers or crew."

Last year Wikileaks diplomatic cables included one for the Fiji based US Ambassador accredited to Tuvalu, Larry Dinger, who claimed Sovereign had links to North Korea. He wrote his cable as neighbouring Kiribati created an FOC operation with Sovereign.

"Kiribati and Tuvalu have sidled into the clutches of a company and an industry that appear unlikely to benefit the Pacific region or the world," Dinger wrote.

"The two countries' addition to the roll of those proffering flags of convenience, including potentially to terrorists, will not be a plus in US relations."

With very few natural resources, Tuvalu's main revenue source in the last decade has been its internet suffix, dot-TV.

Tuvalu's government sold most of the naming rights to a California company for US$50 million, while it receives US$4 million a year for continued use.

New Zealand aid this financial year is worth $5 million.

- © Fairfax NZ News