Iran renews oil contracts with China, to up exports

barrel Sergio Russo flickrIran was China’s sixth-biggest crude supplier in 2015. (Image source: Sergio Russo/Flickr)Iran is taking steps to ramp up oil exports ahead of an end to US-led sanctions, extending crude contracts with its two Chinese buyers into 2016 and starting talks with other potential buyers there, sources involved in the talks said

According to Reuters, previously the OPEC’s second-biggest exporter, Iran is keen to recoup oil market share lost during USA and EU sanctions over its nuclear programme and is aiming to boost oil output by 500,000 bpd — equal to about 50 per cent of current exports — in early 2016.

Sinopec and Zhuhai Zhenrong Corp will together lift around 505,000 bpd crude from Iran in 2016, the same as this year when both took roughly half of the country’s total exports, sources said.

China bought 536,500 bpd of Iranian crude oil in the 10 months to end-October, down 1.9 per cent on a year ago as a third regular client, independent Dragon Aromatics, halted purchases after a fire incident.

Anticipating an end to sanctions at the beginning of 2016, Tehran last week offered about 50 oil and gas projects to be developed by foreign investors, and over the weekend unveiled much-awaited revisions to its contract aimed at luring back investors.

Iranian oil officials have, in the last two months, met with traders at PetroChina, the country’s second-largest state refiner, and state-run CNOOC, which runs a petrochemical complex with Shell, three sources involved in the talks said.

Iran was China’s sixth-biggest crude supplier in 2015, but faces competition from rivals such as Saudi Arabia and Iraq. Iranian oil is more expensive than similar grades from other Middle Eastern suppliers due to its lower sulphur content and slightly higher yield of petrol, said a senior trader with CNOOC.

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