Iran's shipping woes delay crude deliveries to China
Iranian crude volumes received by China have been below contracted levels since September, because Iran's tanker fleet, the sole transporter of its crude to China, has been struggling to meet delivery schedules, trade sources said on Friday. Iran, grappling with tough Western sanctions targeting its energy and petrochemical sectors, has delayed loading of some shipments for September, October and November to China, its largest oil customer and top trading partner.
Copyright Reuters, 2012
The delays are further evidence the National Iranian Tanker Company (NITC) is struggling to meet delivery schedules after a European Union insurance ban caused buyers to cut back on orders, forcing NITC to deploy more than half of its tanker fleet to store oil. "What was nominated was different from what was actually loaded," said one Chinese buyer, who declined to be identified because he was not authorised to speak to the media.
"Almost every cargo was delayed, some were even delayed for 10 to 15 days." China is expected to have nominated 15.5 million barrels of Iranian crude for September, roughly 520,000 barrels per day (bpd), which would have required eight very large crude carriers (VLCC) to transport each month. A round trip voyage between Iran and China takes about 48 days.
The NITC has a fleet of 39 oil tankers including 25 VLCCs. Its plan to expand its fleet, including a $1.2 billion order to have 12 super-tankers to be built in China, has been postponed. The loading delays for China-bound cargoes were in part caused by the resumption of imports by South Korea, which opted to ship in via Iranian tankers because it faced difficulties in securing insurance elsewhere for vessels.
Iran has designated three tankers to deliver crude to South Korea via round trip from Tehran to Seoul, said a South Korea government source who requested anonymity because he was not authorised to disclose such details. The delays to China, however, will have no substantial impact on the production plans of Asia's top refiner Sinopec, a key buyer of Iranian crude, as its has adjusted crude supplies within its plants. "Refinery run rates have not been affected, but switching to other crudes makes some refineries less profitable," said a second Chinese source, who also was not authorised to talk to the media. It was not immediately clear whether the delays would force China to scale back on its Iranian oil imports.
Iran's oil supply, which has hit its lowest in more than two decades, is unexpectedly continuing to decline due to Western sanctions, putting further strain on the country's financial resources, the International Energy Agency (IEA) said. Exports from the Middle Eastern nation, once the world's fourth-largest exporter, slumped to a new low of 860,000 barrels per day (bpd) in September, compared with 2.2 million bpd at the end of 2011.
Iran's Opec governor said its oil exports have remained steady in recent months. Its exports could be further hit after the European Union widened sanctions to major Iranian state companies in the oil and gas industry, including the National Iranian Oil Company and the NITC, and tightened curbs on the central bank.
China's Iranian crude oil imports fell by nearly a fifth in August on the year to about 371,000 bpd, customs data showed. Imports in the first eight months of this year were down 22 percent on the year to 425,600 bpd. Sinopec has set its 2012 import target for Iranian crude at 400,000-420,000 bpd, 16-20 percent below last year's 500,000 bpd, largely due to cuts made in the first quarter because of disputes over the 2012 supply contracts, industry officials have said.