Iran's oil trade with China, its biggest crude buyer, has not suffered the problems hampering its exports to India, Beijing-based oil industry officials said on Monday. Chinese companies first started paying in euros for their Iranian crude in 2006 and have also considered payment in yuan, the sources said. There have been no problems with payments, they said.
Iran is China's third-largest crude supplier, shipping around 540,000 barrels per day (bpd) in the first six months of the year, or more than 10 percent of Beijing's 5.1 million bpd of imports. The flow grew 50 percent from the first half of 2010. Tehran has cut supply to India for August as sanctions have made it difficult for New Delhi to find a way for its refiners to pay for Iranian oil. Chinese refiners have suffered no such problems in dealing with Iran, the sources said.
"We've been paying in euros all these years," said a Chinese buyer of Iranian oil. The two industry officials said there were no pending debts between China and India. "There is no problem with euro payment," said a second industry executive with direct knowledge of the oil trade between the two nations. The idea of settling some of the oil trade, worth about $10 billion in the first six months of the year, in Chinese currency was floated early last year and is still on the table, sources said.
"The idea was to settle some 20 percent of the whole trade in yuan," said the official, who requested anonymity. "The Chinese side has accepted the idea but has not yet been done." Asia's top refiner and China's leading buyer of Iranian oil Sinopec Corp discussed internally the possibility of yuan settlement in early 2010. The idea was for Iran to set up an account at a Chinese bank and receive payment in yuan for use to pay for purchases of fuel, equipment and toward the cost of projects being undertaken in Iran by Chinese companies.
State oil trader Zhuhai Zhenrong Corp, which buys just under half of China's crude imports from Iran, was among the first of Tehran's international customers to shift to the euro from the US dollar in 2006, when Iran's central bank said it wanted to cut back its US dollar holdings.
CRUDE IMPORTS SURGE The volume of crude Iran sells China has increased even though Chinese traders have said prices of Iranian oil were uncompetitive compared to other Middle East supplies. The strong rebound, partly due to a weak base a year earlier, has come while India and Iran have struggled to find a way for New Delhi to pay for oil. With mounting debts and no solution in sight, Iran has cut its 400,000 barrels per day supply to India for August.