Reuters: Chinese state oil trader Zhuhai Zhenrong Corp is set to renew a one-year deal to buy from Iran about one million tonnes of fuel oil for 2008, shortly after the company agreed to extend a major crude agreement, traders said. By Chen Aizhu
BEIJING, Nov 20 (Reuters) – Chinese state oil trader Zhuhai Zhenrong Corp is set to renew a one-year deal to buy from Iran about one million tonnes of fuel oil for 2008, shortly after the company agreed to extend a major crude agreement, traders said.
Zhenrong, China’s main importer of Iranian oil, will lift one 80,000-tonne cargo of straight-run fuel oil each month from National Iranian Oil Company (NIOC) for January through December, the same volume as this year, traders close to the deal told Reuters.
The agreement, to be officially signed within the next few months, was reached as officials from China’s top refiner Sinopec Corp visited Tehran at the weekend to seek more crude for next year, to meet steady demand growth in the world’s second-largest oil consumer.
Zhenrong, which started oil dealings with Iran over a decade ago and was among the first buyers to heed Tehran’s call to pay in euros instead of U.S. dollars, has agreed with NIOC to extend a crude supply deal for 2008 with a steady import volume of 240,000 bpd, traders have said.
“The Iranian fuel oil has become a main business for Zhenrong (apart from crude),” one trader said.
China, Asia’s largest buyer of fuel oil, is among a handful Asian lifters of the heavy refinery fuel, for further processing at refineries into higher-value diesel and gasoline. Other buyers include Japanese firm Mitsui and Marubeni, as well as South Korea’s SK Energy.
Iran sold 1.87 million tonnes (45,000 barrels per day) of fuel oil in the first nine months of this year, up nearly 10 percent from a year earlier, official customs data showed. Traders said this included cargoes supplied on a spot basis.
Iran’s crude sales into China were about 10 times bigger at 400,000 bpd in the same period, or 17 percent above the year-ago level as shown in the customs figures.
China wants more oil for 2008 from Iran, its third-largest supplier after Saudi Arabia and Angola.
Beijing-backed Chinese state traders, who appeared oblivious to the rising international tensions over Tehran’s disputed nuclear programme, said business such as term supply talks are being carried on as usual.
China, which holds the power to pass or veto further U.N. sanctions on Iran, has repeatedly called for a peaceful resolution to the nuclear standoff. (Editing by Anthony Barker)