Business | Oil & Gas
China to keep Iran term crude imports steady
China will keep Iranian crude imports via term deals steady this year after volumes jumped a third in 2008 versus the year before, amid uncertainties over allocations from Opec's No 2 producer, which has started cutting supplies.
- Reuters
- Published: 23:47 January 9, 2009
Singapore: China will keep Iranian crude imports via term deals steady this year after volumes jumped a third in 2008 versus the year before, amid uncertainties over allocations from Opec's No 2 producer, which has started cutting supplies.
State oil trader Zhuhai Zhenrong and top refiner Sinopec have renewed their contracts to buy a total of around 400,000 barrels per day (bpd) of crude this year from Iran, the world's No 4 oil exporter, two trading sources said.
Last month, China's top state refiners agreed to increase their Saudi crude imports by about four per cent in 2009 from 2008, a small rise after years of big increases.
Iran has turned to Asia, especially fast-growing economies such as China, to boost shipments and forge partners in its energy sector as European firms face political pressure to stay out and as Washington's sanctions have barred US investment since 1995 due to Tehran's nuclear ambitions.
China is the second-largest buyer of Iranian crude, while the Islamic Republic is the third-biggest oil supplier to China, after Saudi Arabia and Angola, accounting for 12 per cent of China's supplies.
Iran shipped 435,000 bpd of crude to China in the first 11 months of 2008, including term and spot cargoes customs data showed.
Zhuhai Zhenrong, which started buying oil from Iran more than a decade ago and was among the first buyer to heed Tehran's call to pay in euro instead of US dollars, has extended its agreement with National Iranian Oil (NIOC) to import 240,000 bpd of crude for 2009.
Zhuhai Zhenrong supplies the crude to Sinopec and PetroChina, the country's second-biggest refiner.
Sinopec has agreed to import 150,000-160,000 bpd of Iranian crude this year, unchanged from 2008. But the volume nearly tripled from 2007 after Sinopec Group, parent of Sinopec Corp, finalised a $2 billion pact to develop Iran's huge Yadavaran oilfield.
However, there could be questions over allocations after Iran said this week it would cut January supplies to at least two of its Asian buyers by 14 per cent, the first reduction in at least three years and the most visible sign yet of Tehran implementing deep output curbs in line with OPEC's bid to halt sliding prices.
"Contract is contract, implementation could vary especially after Opec's output curbs," said one Chinese source close to Iranian oil import talks, who declined to be named due to official policy.
Neither Zhuhai Zhenrong nor Sinopec received any notice on allocation cuts from Iran so far.
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