Asian customers of Iranian oil are steady in taking supplies from the country but the Europeans refuse to buy any, despite having received exemptions from US sanctions.
India’s Hindustan Petroleum Corp said Wednesday it plans to buy 0.9 million tonnes of Iranian oil this year.
The company imported 0.7 million tonnes of crude oil from Iran during the financial year between April 2018 and February 2019, director of refineries M K Surana said.
Last month, Indian refiners began clearing their oil debt to Iran under a new payment mechanism which they put in place after the US reimposed sanctions on the Islamic Republic.
India is Iran’s second biggest oil customer after China and one of the eight countries which got US waivers late last year to continue crude oil imports from Iran for six months.
China, South Korea and Japan have also started importing oil from Iran but European nations have not responded yet to Tehran’s offers to sell them crude oil despite having US waivers, Minister of Petroleum Bijan Zangeneh said Tuesday.
“No European country is buying oil from Iran except Turkey,” he told a news conference in Tehran. “Greece and Italy have been granted exemptions by America, but they don’t buy Iranian oil and they don’t answer our questions.”
Vice President Es’haq Jahangiri believes it is impossible to sanction Iran, a day after saying the country was selling as much oil as it needed despite US sanctions.
Britain, France and Germany last week launched the Instrument In Support Of Trade Exchanges (INSTEX), a system to facilitate non-dollar trade with Iran and avoid US sanctions.
Iranian officials have warned that the country would revise relations with Europe if it did not benefit economically from INSTEX.
Zangeneh described the situation more difficult than the Iraqi war on Iran in the 1980s but said the country is finding creative ways to cope.
The US, he said, wants to zero Iran’s export incomes but Iranian officials are doing their best to neutralize it.
His ministry has already offered oil on the Tehran bourse to bypass sanctions. Zangeneh said Iran now considers selling Islamic bonds to finance $6.2 billion worth of oil projects.
US sanctions have hampered the country’s plans to develop its upstream sector, but they have also left the country to its own devices for development.
Last month, Iran marked a milestone of 100 million liters per day in gasoline production when the third phase of its most important refining project came online, making the country self-sufficient in the fuel.
Iran is to mark a milestone in gasoline production this week when the third phase of its most important refining project comes online, making the country self-sufficient in the fuel.
According to Zangeneh, more than $10 billion of projects are in the pipeline at the giant South Pars field where four gas processing plants will go on stream this winter with a capacity of 110 million cubic meters per day of natural gas.
Oil exports are a key source of revenue for Iran but the country faces umpteen hurdles for its repatriation.
Deal on Iraqi debt
On Tuesday, Iran and Iraq agreed on a payment mechanism that will enable the two neighbors to do business in the face of US sanctions on Tehran.
The mechanism was discussed in a meeting between Iran’s central bank governor Abdolnaser Hemmati and his Iraqi counterpart Ali Mohsen Ismail al-Alaq in Baghdad and the details were signed off on a document Tuesday night.
Hemmati arrived in the Iraqi capital earlier in the day to discuss banking relations and a payments backlog related to Iran’s gas and electricity exports to the Arab country, he wrote on his Instagram account.
Iraq is Iran’s biggest trade partner, but their relations are increasingly coming under pressure from the US which imposed unilateral sanctions on Tehran in May after abandoning an international nuclear agreement.
On Tuesday, Minister of Petroleum Bijan Zangeneh summed up the tricky situation.
“Every month, $200 million worth of Iranian gas is exported to Iraq which does not pay it, saying you are under sanctions. At the moment, we have $2 billion owed by Iraq for the gas and electricity sold to the country,” he said.
“We had an oil swap from Kirkuk. After the sanctions, the Iraqis stopped that too,” Zangeneh told a news conference in Tehran.
The swap deal was agreed at the end of 2017, under which Iraq was about to truck 60,000 barrels per day (bpd) of crude oil to Kermanshah in western Iran. Iraq’s southern Basra port would receive the same amount of crude from Iran either by tanker or pipeline.
The Iraqis made several batches of shipments but stopped them prior to Washington’s sanctioning of Iran’s oil sector on November 5.
Nevertheless, Iraq relies on Iran for electricity and consumer goods and trade ties are still strong.
Gas imports from Iran generate as much as 45 percent of Iraq’s 14,000 megawatts of electricity consumed daily. Iran transmits another 1,000 megawatts directly, making itself an indispensable energy source for its Arab neighbor.
Basra was hit by violent protests which spread to other cities last summer, partly because of a halt of Iranian electricity exports.