Reuters/Beijing
Iranian oil officials are in Beijing this week to discuss oil sales and Chinese investments in Iran, just days after Tehran and world powers reached a framework nuclear deal, and with the Opec nation’s oil minister due to arrive tomorrow.
Iran’s Oil Minister Bijan Zanganeh is set to make his first trip to Beijing since joining the then new government two years ago, one Iranian oil official and a senior Chinese industry official told Reuters.
China, Iran’s largest trade partner and oil client, has bought roughly half of Iran’s total crude exports since sanctions against Iran were tightened in 2012. Iran, once the No 2 exporter of the Organisation of the Petroleum Exporting Countries (Opec), is looking to ramp up its exports quickly after sanctions are lifted.
Ahead of Zanganeh’s visit, Amir-Hossein Zamaninia, Iran’s deputy oil minister for commerce and international affairs said that he and his colleagues would discuss China’s oil and gas projects in Iran. Officials from state-run National Iranian Oil Company (NIOC) will meet with China’s biggest crude buyers. The NIOC and other officials are expected to meet with regular customers Unipec, the trading arm of top Asian refiner Sinopec Corp, and state trader Zhuhai Zhenrong Corp, which started taking Iranian crude in the mid-1990s when Tehran sought to repay arms purchases with oil.
The officials declined to comment directly on any plans to market more oil to China. Tehran and world powers reached a framework nuclear agreement on Thursday last week, with details still to be worked out on how sanctions would be phased out in exchange for reductions in uranium enrichment.
Iran, the world’s fifth-largest producer, hopes to boost its exports by as much as one million barrels per day (bpd) in just two months once sanctions against it are lifted, although analysts say it will take longer.
“It depends first on the willingness of the Chinese for buying Iranian crude, then everything goes through commercial negotiations,” said Mohsen Ghamsari, NIOC director of international affairs, of any increase in China’s purchases.
Iran’s oil exports have been cut by more than half to around 1.1mn bpd from a pre-sanctions level of 2.5mn bpd. Iran was China’s sixth-largest crude oil supplier last year, behind Saudi Arabia, Angola and others, with sales up 28% from 2013 to 27.46mn tonnes, or about 550,000 bpd, according to Chinese customs data.
A new condensate deal between Zhuhai Zhenrong and NIOC is set to lift China’s total crude oil contract volumes to above 600,000 bpd later this year.
Chinese energy companies are also big investors in Iran’s oil sector, and Iran has been sweetening the terms it offers on development contracts to counter worries caused by sanctions and low crude prices.
Chinese energy giants China National Petroleum Corp (CNPC), Sinopec Group and China National Offshore Oil Corp (CNOOC) have already inked preliminary pacts with Iran on development projects worth tens of billions of dollars, mostly under the presidency of Mahmoud Ahmadinejad.
But Chinese firms have stalled or scaled back activities in Iran since 2010, fearful that unilateral sanctions from Washington would hurt their businesses in the US. Iran also has stored a sizeable amount of cash in at least one Chinese bank, the Bank of Kunlun, because US sanctions have choked the flow of funds. The deputy oil minister said the officials are not in China to resolve the money issue.
“The money question will not be resolved unless the sanctions are lifted,” said Zamaninia.
“China has a number of big projects in Iran, and we’re going to polish and resolve questions about those projects,” Zamaninia told Reuters about the delegation’s visit to Beijing.
Iran’s Oil Minister Zanganeh has also met with Western oil executives at recent Opec meetings in Vienna, including Italy’s Eni, Royal Dutch Shell and Austrian oil and gas group OMV.
China’s investments in Iran include projects such as the $4.7bn phase 11 development of the giant offshore South Pars gas field, which Iranian media says CNPC pulled out of in July 2012, and the North Azadegan and Yadvaran oilfields.
The delegation’s visit was initiated at the invitation of China’s top energy authority the National Energy Administration.
Tehran approved to join China-backed Asian bank
AFP/Beijing
Iran has been approved as a founding member of the Beijing-backed Asian Infrastructure Bank (AIIB), China’s finance ministry said yesterday, just days after Tehran sealed a historic framework agreement on its nuclear programme.
Tehran’s application was backed by other founding members on Friday, China’s Ministry of Finance said in a statement on its website. The United Arab Emirates’ bid was also approved.
More than 50 countries, plus Taiwan, have now applied to join the bank in a diplomatic coup for Beijing after Washington initially opposed its allies becoming members.
The US and its Asian ally Japan have not sought to join.
But US Treasury Secretary Jacob Lew said last week that Washington was “ready to welcome” the bank, though he added it should complement existing multilateral institutions such as the World Bank and International Monetary Fund.
Iran’s approval – its application had not been previously announced – comes immediately after the nuclear deal that China helped to broker.
Under the outline nuclear deal, the US and the European Union are to lift all nuclear-related sanctions on Iran once the UN atomic agency has verified that Tehran has stuck to its terms.
The proposed limits will see Iran’s stocks of highly enriched uranium cut by 98% for 15 years, while its unfinished Arak reactor will not produce weapons-grade plutonium.
There are concerns over transparency of the AIIB, which will fund infrastructure in Asia, as well as Beijing using it to push its own geopolitical and economic interests as a rising power.
Under President Xi Jinping, China is pushing to build on the ancient Silk Road trade routes on land and sea, through its “One Belt, One Road” initiative expected to be partly funded by the AIIB.
Meanwhile, China’s new development bank can have an important role in fighting extreme poverty if it establishes high standards for its projects, World Bank President Jim Yong Kim said yesterday.
Vowing to work with an institution resisted by the United States, Kim called the Beijing-led Asian Infrastructure Investment Bank “a major new player in development” that is a “potentially strong” ally in its own work to help development in the poorest countries.
“If the world’s multilateral banks, including the Asia Infrastructure Investment Bank and the New Development Bank, can form alliances, work together, and support development that addresses these challenges, we all benefit – especially the poor and most vulnerable,” Kim said in a Washington speech.
“It is our hope – indeed, our expectation – that these new entries will join the world’s multilateral development banks and our private-sector partners on a shared mission to promote economic growth that helps the poorest.”
Despite Washington’s resistance, China has received applications from more than 50 countries, including important US allies, to join the AIIB, which will aim at financing infrastructure development around Asia.
The United States and Japan though have resisted joining, with Washington warning that the AIIB needs to erect strong standards for lending and project development, and be fully transparent in its approach.
The United States sees the AIIB and a development bank planned by the BRICS emerging-market countries, the New Development Bank, as competitors to the World Bank and the Asian Development Bank, where the United States is the largest shareholder.
Kim echoed that concern. He stressed that only “with the right environment, labor and procurement standards” can the two new institutions become important forces to fight poverty.
In that case, he said, “the World Bank Group sees these development banks as potentially strong allies.”
Kim said he will have talks with Chinese authorities next week at the World Bank’s spring meetings in Washington on potential cooperation.
“I will do everything in my power to find innovative ways to work with these banks,” he said.
Zanganeh: Looking to ramp up oil exports quickly after sanctions are lifted.
