Iran seeks to sell crude in Asia as sanctions bite: traders

Reuters News
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Posted: Feb 29, 2012 10:08 AM
Iran seeks to sell crude in Asia as sanctions bite: traders

By Yaw Yan Chong

SINGAPORE (Reuters) - Iran is trying to sell about 200,000 tonnes of crude oil from a supertanker floating off Singapore, traders said on Wednesday, a rare move that highlights how U.S. and European sanctions on Tehran's oil exports are hindering sales.

In another sign of Iran's difficulties, traders say a second supertanker that is heading towards China with about 270,000 tonnes of crude oil is carrying volumes which are above the usual term-contract supplies to the world's second largest oil consumer.

"Iranian light sweet crude is being offered to blenders, especially those that operate floating storages off Malaysia, and to players who sell refining feedstock into China, off the Delvar," a Singapore-based Western crude trader said.

"It is hard enough to sell Iranian crude, given the circumstances, what more a such prompt cargo that is already literally at the doorstep here."

The 270,000-tonne Delvar arrived in Singapore from Karimun in Indonesia over the weekend after discharging a 60,000 tonne cargo of condensate bound for south China.

Iran, the world's fifth largest oil producer, has been struggling to sell its crude in the face of tightening U.S. sanctions and an EU embargo that kicks in on July 1.

The sanctions are aimed at punishing Iran for its nuclear programme which the West believes will be used for atomic weapons, but which Iran says is for power generation.

CHINA DEMAND

China, India and Japan, Asia's main energy buyers which collectively take 45 percent of Iran's crude exports, are planning to cut their imports from Iran by at least 10 percent as the sanctions make purchases difficult.

China is still actively buying Iranian crude, and the second supertanker, the Darab, is bound for Qingdao port, in the refining region of Shandong province, with additional volumes of heavy-sour crude.

Traders said this cargo, which loaded in the United Arab Emirates, is over and above the usual term contract volumes that go into Shandong. The Darab is due to arrive on March 19.

A third supertanker, the Himand, is expected to arrive in Ningbo on March 6, with what traders said are normal volumes from term deals.

The vessels are part of the National Iranian Tanker Co.'s (NITC) fleet.

"The flow of Iranian crude into China is mainly termed, and delivered mostly by Chinese tankers, though there are some regular flows by Iranian ones," a trader said.

"The Chinese have no problems taking the extra volumes, especially now, because they are fundamentally short on feedstocks, and their ability to buy has been hampered by the very-high flat-price levels currently."

China needs all the crude it can get, after supplies fell due to the closure of its Penglai oilfield since September and the drop in exports from Southern Sudan.

Refineries are also producing less fuel because soaring crude prices have made their business unprofitable.

East Asia imports Iranian fuel oil, and a monthly average of 550,000-600,000 tonnes of both straight-run 280-cst from Bandar Mahshahr and low-density 380-cst from Bandar Abbas were exported into East Asia last year, the highest monthly average for at least six years, Reuters data showed.

The Iranian cargoes are either used as refinery feedstock, or as high-quality blendstock because of its low-density and low-water specifications.

(Additional reporting by Lee Yen Nee; Editing by Miral Fahmy)