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Copper Tip Energy Services
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Copper Tip Energy

Iran Asks Chinese Oil Buyers to Maintain Imports After U.S. Sanctions

These translations are done via Google Translate

May 16, 2018, by Chen Aizhu

BEIJING (Reuters) – A senior official at Iran’s state-owned oil supplier met Chinese buyers this week to ask them to maintain imports after U.S. sanctions kick in, three people familiar with the matter said, but failed to secure guarantees from the world’s biggest consumer of Iranian oil.

Company (NIOC), held separate meetings in Beijing on Monday with top executives at Chinese oil giant Sinopec’s trading unit and state oil trader Zhuhai Zhenrong Corp to discuss oil supplies and seek assurances from the Chinese buyers.

Khoshrou was accompanying Iran’s foreign minister Javad Zarif in the first stop of a tour of world powers before traveling on to Europe. Tehran is mounting a last-ditch effort to save a 2015 nuclear deal that Washington has abandoned, with plans to impose unilateral sanctions including strict curbs on Iran’s oil exports.

“During the meeting, Mr. Khoshrou conveyed Mr. Zarif’s message that Iran hopes China will maintain the levels of imports,” said one person briefed on the meetings.

China, the world’s top crude oil buyer, imported around 655,000 barrels a day on average from Iran in the first quarter of this year, according to official Chinese customs data – equivalent to more than a quarter of Iran’s total exports.

Chinese executives did not make firm commitments but said as state oil companies they will fall in line with Beijing’s wishes, the person said. The visit was the NIOC marketing chief’s second to Beijing this year – he also met with Chinese customers about a month ago.

A second person with direct knowledge of the discussion, said Chinese firms “shared the same hope to maintain purchases”, adding companies are still assessing the possible impact of the new sanctions.

The people familiar with the matter declined to be identified because they are not authorized to speak to media.

Sinopec and Zhuhai Zhenrong declined to comment. NIOC did not immediately respond to a request for comment.

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Buyers in Asia – including China – and Europe have said they will seek waivers from sanctions during a six-month grace period now in force.

During a visit by Zarif to Brussels on Tuesday, European powers vowed to keep the 2015 nuclear deal alive without the United States by trying to keep Iran’s oil and investment flowing, but admitted they would struggle to provide the guarantees Tehran seeks.

China’s foreign ministry said last week it regretted the U.S. decision and called for parties involved to stick to diplomatic approaches to stay on track for full implementation of the 2015 accord.

Between 2012 and 2015, under European Union and U.S. sanctions to curb Iran’s nuclear program, Chinese companies took up nearly half of Iran’s oil exports, which were slashed by more than half and cost Tehran as much as $80 billion in lost revenue.

Sinopec, Asia’s top refiner, and state-oil trader Zhuhai Zhenrong Corp together account for close to 90 percent of China’s total Iranian oil purchases. State oil group CNPC buys the rest.

Apart from supplies under annual contracts, CNPC and Sinopec have been lifting Iranian crude as part of their billions of dollars of investment at Iranian oil fields.

China has less of a banking issue in trading with Iran than some international peers. During previous sanctions Beijing used a domestic bank, Bank of Kunlun Co Ltd, to settle tens of billions dollars worth of oil transactions with Iran. Most of the transactions were settled in euros and Chinese renminbi.

Additional reporting by Florence Tan in Singapore; Editing by Kenneth Maxwell

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