Wednesday, September 23, 2009

China is no friend of ours

Chinese companies supply Iran with petrol

Javier Blas and Carola Hoyos in London and Daniel,Dombey in Washington

Published: September 23 2009 03:00 | Last updated: September 23 2009 03:00

Chinese state companies this month began supplying petrol to Iran and now provide up to a third of its imports in a development that threatens to undermine US-led efforts to shut off the supply of fuel on which its economy depends. AThe sales come in spite of moves over the past year by international companies, including BP and Reliance of India, to stop selling petrol to Iran, and highlight the difficulties of implementing sanctions aimed at curbing Iran's nuclear ambitions.

Traders and bankers familiar with Iran's purchasing said the gap left by the withdrawal of such long-standing suppliers had been filled by Chinese petrol this month.

While Iran is one of the world's biggest oil producers its refineries are dilapidated and it suffers from run-away petrol demand because of generous sub-sidies.

Foreign ministers from the world's big powers are meeting today in New York to discuss how to persuade Iran to curtail its nuclear programme, which Tehran maintains is for peaceful purposes.

Oil traders said Chinese state-owned oil companies were selling the petrol through intermediaries. The sales are legal, as fuel imports are not at present included in sanctions against the country.

A Chinese official in Washington said: "Chinese enterprises conduct normal trade relations with Iran, strictly speaking within the relevant UN resolutions.

"On the UN side, the Chinese government position on the Iranian nuclear issue has been consistent and clear: China has been working with the relevant parties together for the peaceful resolution of the issue through diplomatic means."

President Barack Obama yesterday met Hu Jintao, Chinese president, in New York, as the US continues to seek greater support from Beijing over Iran.

Other Asian and European oil companies and several trading houses also sell petrol to Tehran.

Lawrence Eagles, head of commodities research at JPMorgan, said: "We estimate, based on what we are hearing in the market, that 30,000-40,000 barrels a day of Chinese petrol is making its way from the Asian spot market to Iran via third parties."

His comments reflect the view of several leading -traders supplying Iran with petrol.

Iran usually imports 120,000 b/d. The traders did not disclose the identity of the Chinese companies or the names of the intermediaries.

Beijing's leading oil companies Sinopec and CNPC have signed $4bn contracts to help Tehran to pump more oil out of its fields, many of which are declining with age.

The US and some of its allies want to shut off Tehran's petrol imports, long depicted as the Iranian economy's most vulnerable point.

Mr Obama endorsed such a goal before taking office and US diplomats have discussed banning petrol sales to Iran in a possible new round of United Nations Security Council sanctions.

Proposed legislation to punish international companies selling petrol to Iran has already won the backing of the vast majority of members of the US Congress.

Nuclear options, Page 15 Simon Schama, Page 17

Copyright The Financial Times Limited 2009. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
http://www.ft.com/cms/s/0/07b6576a-a7da-11de-b0ee-00144feabdc0.html

No comments: