Iran says it can cope with EU oil ban threat

IRAN has alternatives in place to let it cope with a threatened European Union embargo on its oil and increased US pressure, and plans to keep up exports of some 2.3 million barrels per day (bpd) this year, a senior Iranian oil official said.

EU governments have reached a preliminary agreement to ban imports of Iranian crude to the European Union, but have yet to decide when such an embargo would be put in place, EU diplomats said yesterday.

Tehran had already considered different routes if that were to happen, S. M. Qamsari, international director of the National Iranian Oil Co (NIOC), told Reuters by telephone from Tehran shortly before the report on the EU stance emerged.

“We could very easily replace those customers,” said Qamsari. Some, but not all, of any displaced volume could move into China as well as other Asian countries and Africa, he said. Iran was unlikely just to store crude on tankers as that was only a short-term solution.

He said he expected shipments would remain unchanged this year and the volume of term, or annual, contracts was unchanged.

Roughly 30%, or just under 700,000 bpd, of Iran’s oil steams west of Suez, he said. More than half that volume is shipped to Europe, roughly 200,000 bpd goes to Turkey and the remainder is routed into Africa.

The International Energy Agency estimates Iran exports about 450,000bpd to the European Union.

The NIOC official said Europe’s longstanding buyers of Iranian crude — among them France’s Total and Italy’s Eni — have voiced concern about potential EU sanctions, but had yet to cut back on contractual supplies.

Any punitive moves by Brussels could cause European consumers to suffer through higher prices at the pump, he said.

US President Barack Obama, seeking to dissuade Iran from pursuing a nuclear programme that Washington believes is aimed at weapons development, has enforced new sanctions that could hurt Tehran’s oil exports by preventing refiners from paying up.

Qamsari said Washington’s tough tactics had already made life difficult. “We are supplying our crude, but receiving the money with some difficulty — for sure,” he said. Tehran had “created some channels” for payments, he added.

The Islamic Republic’s oil sales to China, its single biggest buyer, have decreased this month as the two sides haggle over 2012 contractual payment terms, trade sources said. Top refiner Sinopec will buy less than half the crude it typically imports from Iran.

“It is to some extent true,” said Qamsari, explaining that Iran’s term crude oil contracts with China were up for renewal this month. Two of three contractors had agreed volumes. “We’re making good progress and hope to finalise soon,” he said.

Iran designated about 440,000 bpd of contract volume for China last year, he said, and was aiming to supply the same amount in 2012.

Reuters