Over the last year, China imported an average of 306,000 bpd of crude oil from Iran, totaling 17.8 million tonnes. Most of these imports, 75 percent, came indirectly via Malaysia, Oman, or the United Arab Emirates.

As demand increases, this March, Chinese imports of Iranian oil are expected to reach levels of 856,000 bpd, an increase of 129 percent in February. The sudden influx of Iranian oil is reported to have caused congestion in ports as tankers are offloaded.

China is drawn to Iranian oil thanks to its low costs, often priced at between $3 to $5 below the Brent benchmark.

Imports from Iran have decreased substantially across Asia, particularly to China, India, Japan, and South Korea, since 2018 following the sanctions imposed on the country under the Trump Administration. However, China’s uptake of Iranian oil over the last few months suggests this trend is likely to change under the new Biden Administration.

Imports never completely stopped from Iran to China, but they certainly decreased. However, according to Emma Li, a Refinitiv crude flows analyst, “Volumes started to surge from the last quarter of 2020, with Shandong province as the top receiving region which indicates independent plants are the main consumers”.

India has also begun importing Iranian oil, under the assumption that trade with Iran will resume. This comes as The National Iranian Oil Company (NIOC) attempts to foster new partnerships across Asia, to boost its export potential as it ramps up national production.

A government official in India believes Iranian supplies will return to the market within three to four months. With expectations for developing additional partnerships following Iran’s June elections.

China’s interest in Iranian oil goes hand in hand with the comprehensive strategic partnership between the two countries. The initiative expects trade between the two countries to reach $600 billion over the next decade. In addition, China’s Belt and Road initiative (BRI) attempts to strengthen regional political, economic, and strategic ties, with a focus on the energy industry.

In recent energy deals with China, Iran has been allowed to complete financial transactions in foreign currencies, such as Euros, to avoid being tied in with the U.S. dollar and imposed U.S. sanctions.

At present, Iran provides just three percent of China’s total oil supply. However, greater collaboration between the countries across a variety of industries could encourage a stronger energy deal as the force of the U.S. sanctions on Iran gradually subsides.

China looks to remain the world’s top oil importer, with an oil demand of around 12 million bpd. This makes it an essential partner for oil-rich nations to establish long-term trade links. Despite a drop in demand in response to the Covid-19 pandemic, China’s oil imports increased by 32 percent in January.

This reflects a trend across the entire Asian region, which is thought to have increased its oil imports by 7.5 percent between December and January.

It seems that after years of difficult relations with Iran, China and the Asian region will soon resume their energy partnerships with the oil-rich nation as it intensifies production to meet the increase in demand.

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He pointed to the manufacturing oil equipment and parts and added that the Islamic Republic of Iran manufactures 80 percent of its fixed oil equipment in the country, no need to import equipment from other countries.

Relying upon domestic capabilities and potentials, giant steps have been taken in order to frustrate and foil unilateral and unjust US sanctions imposed against the country, Zanganeh reiterated.

Elsewhere in his remarks, the oil minister pointed to the high capability and potential of knowledge-based firms and stated, “It is hoped that the Islamic Republic of Iran would be able to attain self-sufficiency in the sector of manufacturing gas turbines and oil pumping devices thanks to the high potential of domestic knowledge-based companies.”

Former President Donald Trump withdrew US from Iran’s nuclear deal, JCPOA, in May 2018 and imposed tough sanctions against the Islamic Republic of Iran for cutting off its oil export to ‘zero levels’ but all the malicious objectives were frustrated.

Zanganeh previously said, “We will return to the market stronger than before, sooner than you might think,” , adding that Iran’s oil exports have “increased sharply in recent days”.

Zanganeh’s comments, reported by the oil ministry’s Shana news agency, are difficult to substantiate. It is hard to monitor Iranian oil exports with regular tracking data because shipments are frequently conducted by state-owned vessels that turn off their transmitters. Vortexa data show Iranian crude and condensate exports averaged 163,000 b/d in the fourth quarter of 2020, while Argus estimates that Iranian crude production increased by 20,000 b/d to 2mn b/d last month.

Joe Biden’s victory in November’s US presidential election paves the way for a marked shift in Washington’s foreign policy and has raised the prospect of US sanctions on Iran’s oil exports being lifted. But the Biden administration is tempering expectations for quick results, insisting that Iran must return to full compliance with its commitments under the 2015 nuclear deal if sanctions are to be relaxed. Tehran expects sanctions relief before it resumes its obligations with the nuclear deal. “The ball is in the US’ and Washington’s court,” Iran’s president Hassan Rohani said earlier this week.

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He further noted that the aforementioned $40 billion will be provided through domestic and foreign financing scheme.

He went on to say that 27 petrochemical projects will be put into operation within the next two and a half years, four of which will come on stream in the second half of the current year (to start Sept. 21).

Once these 27 petrochemical projects are fully commissioned by 2021, revenues of Iran’s petrochemical industry will hit $25 billion, he added.

With the studies made in this regard, it is predicted that the number of petrochemical complexes will increase from 56 to 83 by 2021, he said, adding, “in this regard, 26 petrochemical projects will be launched from 2021 to 2025, increasing the total production capacity of Iran’s petrochemical industry in 2025 to 133 million tons/year which will bring in $37 billion worth of revenues.”

He put the liquid and gas feedstock that petrochemical units receive at 33 million tons, 25 million tons of which are earmarked directly.

Total feedstock volume of petrochemical units in the country stands at 650,000 barrels of oil, he added.

Elsewhere in his remarks, CEO of National Petrochemical Company (NPC) put the total production capacity of 54 petrochemical units in 2016 at 65.8 million tons, the volume of which hit 57 million tons in 2013.

Deputy Oil Minister for Petrochemical Affairs Mohammadi added, “we are not facing any problem with providing feedstock in new petrochemical projects. For this purpose, we have decided to consider 30 percent discount for gas feedstock of the projects that need for the development of their downstream units.”

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He was speaking on the sidelines of a signing ceremony for a deal between Pars Oil and Gas Company (POGC) and Petropars Company for developing Belal Gas Field in the Persian Gulf.

“The point was for the oil sanctions to be lifted so that we could freely sell our oil. This credit line will put Iran in debt in the future,” he added.

The $15 billion credit line has been proposed by the French side in a bid to salvage the 2015 Iran nuclear deal in the wake of US’ unilateral withdrawal and Iran’s countermeasures in reducing commitments to the agreement.

The package is meant as an incentive to keep Iran in the nuclear agreement in the face of US’ efforts to drive the country’s oil exports to zero.

The sum is said to account for about half the revenue Iran normally would expect to earn from oil exports in a year.

Elsewhere, Zanganeh maintained that the development of the phase 11 of South Pars has not yet been exempted from US sanctions.

He then refused to confirm data of Iran’s oil reserves or answer any questions regarding Iran’s measures to bypass US sanctions.

He did note, however, that Iran is in talks with China to peacefully resolve the issue of the East Asian country’s decision to leave the SP11 development project.

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In this period, $3.4 billion worth of products were imported into the country, showing a 8.1 percent decline as compared to the last year’s corresponding period.

Considering the imports and exports value, trade balance without crude oil hit negative in the same period except second month of the current year.

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The multilateral nuclear deal has been in jeopardy since US President Donald Trump pulled his country out of the JCPOA in May last year and stepped up sanctions on the Islamic Republic in what he called ‘maximum pressure’ campaign.

Under the deal, signed between Iran and the five permanent members of the United Nations Security Council – the United States, France, Britain, Russia and China – plus Germany, Tehran undertook to put limits on its nuclear program in exchange for the removal of nuclear-related sanctions.

Since May, Iran has introduced cuts to its nuclear commitments twice in compliance with articles 26 and 36 of the JCPOA. Iran says these measures will be reversible as soon as Europe finds practical ways to shield the Iranian economy from unilateral US sanctions, which were imposed last year when Washington withdrew from the nuclear deal.

“What we have proposed to Europeans is to either buy our oil for their companies through obtaining US’s permission or if they cannot do this, provide the Islamic Republic with credit lines in proportion to the same amount of our oil sales. Our return to full JCPOA implementation is impossible without these measures,” Araghchi added in the interview.

Pointing to France’s initiative to salvage the deal in G7 summit in Biarritz, he highlighted that “the American side has shown some flexibility in issuing waivers for Iran’s oil sales.”

“This is the very split that has opened up in America’s maximum pressure policy and the very achievement that Iran is obtaining in its maximum resistance policy,” he highlighted

“There will be strenuous and complicated negotiations ahead of us for arriving at a specific formula,” to salvage the JCPOA, the deputy FM added.

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He said over 90% of petrochemical revenues returns to the domestic Forex Management Integrated System (locally known as NIMA) which allows importers to supply their required foreign currency without specific problems.

“Last year, our petchem exports were valued at over $11 billion, $9 billion of which returned to NIMA, and the rest was consumed by the petchem industry,” he said.

He then praised the performance of private petrochemical companies, and said “all revenues obtained from the government’s exports of oil products returns to the treasury, and are completely in the possession of the Central Bank.”

“Petchem production will reach 100 million tons by the end of 2020. We are standing on a firm ground for taking a leap [in increasing production],” he added.

The construction of phase 11 of South Pars gas field will commence this year, he said.

He was then asked to elaborate on the status of Iran’s joint gas fields.

“We have two main fields: one is shared with Iraq, and our share is over 300,000 barrels. At the moment and before, our production has been 50,000 barrels; still, we have made more progress in this regard than Iraq,” he said.

“The other is the South Pars, shared with Qatar. Our production at the moment has doubled, and we are ahead of Qatar in daily production,” he added.

Zanganeh then maintained that the oil ministry has no issues with exporting oil productions.

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Following is the text of the interview:

How do you evaluate the current level of economic, political, and cultural relations between Iran and Indonesia? And what steps do you think you have taken to develop relations between two countries during your mission in Iran?

The two countries are really in good level of cooperation.  During the last one year, the vice president of Iran visited Indonesia and also Indonesian Minister of Health and Minister for Women’s Empowerment and Child Protection came to Iran. The two countries have a very steady and developing cooperation in the fields of youth, women’s empowerment and health sectors. In general, both countries support each other, and share almost same views regarding to human rights and also multilateral forums since Indonesia is the member  non-permanent member of the UN Security Council. we have sent several message to the international community that we are very close to each other for example we showed our solidarity with Iran in UN security council after terrorist attacks in Sistan and Baluchistan province. Similar to Indonesia, Iranian President Hassan Rouhani sent many congratulatory or sympathy messages on any events in Indonesia.

So this year, we are very happy because the Islamic Republic of Iran supported and helped us when we made our election in Iran. Almost 280 or 290 Indonesian people casted their votes in Tehran and Qom successfully because of the support of Iran.

In cultural fields, many Indonesian feel some Persian cultures inherited by maybe traders in Indonesia and we have many things in common.

Mayor of our Conggue this year realized that Ashura commemoration is also hold in the city so we will invite some Iranian cultural centers and experts to see this.

For the first time I landed in Tehran in 2016, we made some paintings exhibitions. We participated in food festival in Zanjan. We will do the same again this year, hopefully by October. We hope we can make it in big places.

On the other hand Iran is very good in movie industry in Indonesia. It made film festival and cultural exhibition in Jakarta. Iranian embassy in Jakarta is very active.

With same efforts by both embassies, we could expect more Iranians and Indonesians know each other.

We are happy to have participated in Quran Exhibition and Quran reciters competitions this year. It’s very difficult to compete with Iran but finally we could win.

We learnt more from Iran and hope in turns you also learn from us and how we deal with some issues for example mitigations of some calamities and natural disasters. We also came to Kish Island and participated in many events in dealing with the catastrophe or mitigation. So we hope we can share our knowledge and experience in many aspects of cooperation.

How do you see the impact of the US unilateral withdrawal from JCPOA and imposition of new sanctions on Iran and its efforts to halt Iranian oil sales on the trade relations between Tehran and Jakarta?

When the US withdrew from JCPOA, we didn’t get the impact directly. We just get the impact recently. During the first quarter of the 2019, we still reached the same volume but right now because of tightening of the unilateral sanctions against Iran, it started to make our entrepreneurs and business community to use third countries.

So when we talk about our products, basically the markets are still here. But the way we send or deliver commodities made so longer paths. It is so inconvenience. So we expect the two countries have direct connections in terms of shipment. We will try to find some ways to connect.  But at this time, we still use third countries to bring our goods.

Indonesia is the largest economy in Southeast Asia and among the top 20 economies in the world that supplying 38% of its energy consumption from oil and 15% from gas, what is the role of the Persian Gulf energy resources and its importance for the Indonesian economy?

Basically Indonesia relies on Persian Gulf energy, for example in terms of LPG or crude oil which fit with our requirements. So we need to make sure the Persian Gulf is safe and good for maritime transport and also secure because our fishermen also are hired by some Iranian vessels. So we need to make sure that the security and safe passage of the Persian Gulf to bring our imported goods or also exported goods. Because we bring our exported good to some countries for example, Oman and Dubai. If we have some conflicts in the region, of course it will affect our distributions.

Following recent tensions between Iran and the US in the Persian Gulf, US Secretary of State Pompeo said that China, Indonesia, Japan and South Korea are heavily dependent on Persian Gulf energy and must defend their own interests in the region. Have the US and Britain invited Indonesia to join the US-led coalition in the Strait of Hormuz? What is Indonesia’s position in this regard?

When we talk about the security of the region, basically we prefer that the littoral states of that region should be the most important countries. So we expect the only Persian Gulf states sit together and talk about this issues.

That is our position and I don’t think that we got the invitations to join the coalitions because it is still on the early stage needs discussions. But in the Security Council we also discussed bout this issues. But again we bring the attentions of all member countries of the Security Council to make sure that region should be safe. That is the most important things.

Recently a high ranking Indonesian parliamentarian visited Iran and he expressed that Indonesia and Iran are ready to boost the cooperation in the fields of combating terrorism and extremism. What can two countries do to this end?

We share the same values when we talk about the terrorism. Right now the most important thing is how we defeat the ISIL. It’s good that you could combat most of them. So we need to talk about how to avoid the elements, the operatives who are now maybe becoming passive to return to our countries. So we need to share information. In the other hand, we can also see in Indonesia that terrorists are not only from ISIL, we also have some local disturbances, particularly those who are making the Islamic values more extreme. We can also disseminate the information and the moderate way of Islam. we have to cooperate to promote Islamic values and peaceful Islam to this end we can arrange some events and seminars together. we have already done some of these activities through our universities.

And we have also talked about the ways to exchange our defense equipment. We are very much interested in aeronautical in Iran and we also see  good opportunities in Ian’s radar and electronic industries.

How do you see the future of the US ‘ “Deal of Century” for Palestine? Do you think it will be successful or not?

We did not participate at Bahrain Summit and we think for the Deal of the Century we have to differentiate firstly the political solutions and secondly the economic solutions. Indonesia thinks similar to Iran in this regards. When we talk about the economic cooperation and assistants we sent to our brothers in Palestine, you don’t need  the Deal of the Century. We contribute to our brothers without showing to everybody that we sent how many million dollars to Palestine. The most important thing is about the political solution. This is the first and foremost target or objective that we need to show. We hope the political solution would be prior to all. We need to make sure that the issue of occupations, illegal occupation should be resolved.  The recognition of Jerusalem, capital city of Palestine should be admitted.

I think these issues are more important than the Deal of the Century.

We do our part and if some other countries want to contribute more, it’s OK but political issue should be prior to all.

Interview by Payman Yazdani

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This is the 7th heavy crude oil offering by NIOC at IRENEX. The company also offered two million barrels of heavy oil on Wednesday (August 21) at a base price of $52.81 per barrel.

Similar to the previous rounds, buyers are required to buy at least 1,000 barrels of oil for land delivery and 35,000 barrels for sea delivery. Buyers can settle the payments 90 days after the transaction.

Buyers can receive their cargo(es) up to three months after the transaction, and the delivery of the cargo(es) in other areas is subject to approval by the National Iranian Oil Company.

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The minimum purchase order is 35,000 barrels for sea and 1,000 barrels for land delivery.

Buyers can settle the payments 90 days after the transaction. They are required to pay 6% of the order value in rials or foreign currency two hours before the beginning of trading time at 02:30 pm local time.

The cargo can be received up to three months after the transaction, and the delivery of the cargo in other regions is subject to NIOC approval.

Today’s session marks NIOC’s seventh round of light crude offer in the current fiscal (started on March 21).

As per the current fiscal budget, the Oil Ministry is obliged to offer 2 million barrels of light crude, 2 million barrels of heavy crude oil plus two million barrels of natural gas condensates on IRENEX on a monthly basis.

Offering crude oil and petroleum products on the energy market is also a part of the government efforts to involve the private sector and international companies in the oil industry, which has long been under government control.

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