China imported a record amount of crude oil from Iran in the first half of the year amid a loosening of U.S. sanctions, further increasing its reliance on Middle East oil supplies.
The increase came as the U.S. is trying to reach a new agreement with Iran over its nuclear program while still keeping pressure on Tehran. Last week, Iran agreed to new steps to contain its nuclear program in exchange for additional sanctions relief from the U.S. The two sides also extended negotiations for four more months.
Chinese customs data Monday showed that Iranian oil imports in the first six months of 2014 were 630,000 barrels a day, up 48% from the same period last year. That is the most crude China has ever imported from Iran in any first half in history, according to Li Li, head of research and analytics at consultancy ICIS C1 Energy. Iran represented about 10% of China’s foreign crude purchases in the first half.
Maziar Hojjati, managing director of the China office of National Iranian Oil Co., or NIOC, said he believes the easing of U.S. sanctions has contributed to the surge in imports.
“The American government has put less pressure on the Chinese due to a deal between Iran and the West,” Mr. Hojjati said. “There is an opportunity to export more to the Chinese market.”
A spokesman at the U.S. embassy in Beijing referred questions to the U.S. State Department in Washington.
The U.S. government in 2012 began targeting financial institutions, including foreign ones, that did business with Iran’s energy sector. Washington offered a six-month waiver to institutions, however, if their countries could show they were reducing imports. Although China regularly received a waiver, it sometimes didn’t show any reduction of Iranian crude imports during the period.
In January, the U.S. suspended those sanctions for China and a number of other countries, saying that countries relying on Iran for significant crude imports “will not be exposed to sanctions” as long as they continue to import Iranian crude at “current average levels.”
Rising Iranian imports mean more dependence on the Middle East for the world’s second-largest economy. Although crude imports from Saudi Arabia fell by 115,000 barrels a day in the first half, China’s combined imports from Iran, Oman and Iraq rose by 440,000 barrels a day, accounting for most of the 570,000-barrel-a-day increase in overseas shipments in the first half.
Iran has reclaimed its title as China’s third-largest crude supplier after Saudi Arabia and Angola. In 2012, the country had slipped from third place after sanctions went into effect.
Mr. Hojjati said some of the surge in imports was the result of a new contract to supply 70,000 barrels a day of condensate, a type of crude with a lower density, to a closely held Chinese company. Meanwhile, China Petrochemical Corp., known as Sinopec Group, also has been importing more crude oil from Iran as part of its annual contract with NIOC, Mr. Hojjati said.
“Sinopec’s oil import is based on business needs and commercial rules,” a company representative said. – reported http://online.wsj.com.
