China is potentially undermining US-led efforts aimed at curbing Iran’s nuclear ambitions by supplying the Middle Eastern state with gasoline, a report said yesterday.
Citing unnamed traders and bankers, the Financial Times said state-owned Chinese oil companies were selling the gasoline through intermediaries and now accounted for one-third of Tehran’s gasoline imports.
It added that the sales are legal because the current sanctions do not cover fuel imports.
PHOTO: AFP
Analysts said although Iran is a major crude producer and exporter, it imports refined products such as gasoline because it lacks the refining capacity.
Between 30,000 and 40,000 barrels of gasoline per day of Chinese gasoline makes its way from Asian spot markets to Iran through third parties, the report said, quoting Lawrence Eagles, head of commodities research at JP Morgan.
This accounts about 33 percent of Iran’s import of 120,000 barrels per day, the report said.
The exports will deal a blow to Washington’s moves to impose sanctions on Iran for continuing with a nuclear program that Tehran says is only for peaceful purposes, while the US and it allies fear it is trying to build an atomic bomb.
The White House wants to cut out Iran’s gasoline imports, which it sees as the nation’s economic Achilles heel.
The news also comes as the UN meets for its General Assembly where it will discuss Iran’s nuclear program.
Analysts said China is a “logical” source for gasoline imports for Iran because of their close ties and that the figures appear to be within range.
“I’m sure it’s true,” said Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore. “It is logical in the sense that Iran has a need and China has surplus supply and Chinese gasoline exports are actually quite high.”
Shum said China this year added new refining capacity and last month exported 140,000 barrels of gasoline per day, the highest level this year, although the data did not give a breakdown of the destination countries.
He said that one-third of Iran’s imports is “well within the capacity of China to supply” given the high volume of its gasoline shipments.
Clarence Chu, a trader with Hudson Capital Energy in Singapore, said he was not surprised about the Financial Times report, which said that the exports began this month.
“China has very good relations with Iran,” he said, adding that China is helping Iran develop its oilfields.
In January, Iran and China signed a US$1.76 billion contract for the initial development of the North Azadegan oil field in western Iran.
The agreement between China National Petroleum Corporation (CNPC, 中國石油天然氣) and the National Iranian Oil Company (NIOC) foresees production from the field reaching 75,000 barrels a day in four years’ time.
In March, Iran’s state-owned gas company, Iran LNG, and a Chinese consortium signed a US$3.39 billion deal to produce liquefied natural gas in the Islamic republic’s South Pars field.
“Iran does not have a lot of refineries. They produce crude but they have to import gasoline. Their refinery is not good,” Chu said.
Shum said China most likely sells the gasoline to Iran through trading subsidiaries of state-owned Chinese firms.
“Some international trading houses also supply the product to Iran, so it’s not like just one source,” he said.
CNPC had no comment on the report.
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