China's Zhenrong to maintain Iran oil imports for 2013

BEIJING Fri Dec 21, 2012 12:18am EST

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BEIJING Dec 21 (Reuters) - China's state-run Zhuhai Zhenrong Corp, the firm that started Beijing's Iran oil business, expects to maintain its crude oil contract with Tehran at a steady volume for 2013, unfazed by tightening Western sanctions, trading officials told Reuters.

Iran's top Asian oil customers -- China, India, Japan and South Korea -- have all reduced imports after the United States and the European Union imposed harsh sanctions aimed at curbing Tehran's nuclear ambitions.

The sanctions have more than halved Iran's oil exports this year, costing Tehran up to $5 billion a month in lost revenue.

Zhuhai Zhenrong, sanctioned early this year by Washington for supplying gasoline to Iran, would keep importing around 230,000 barrels of Iranian crude each day in 2013, a contract volume that has barely changed over the past decade.

This figure would be just over half the total imports this year into China. Beijing is Iran's top oil buyer and trading partner, buying almost half of Terhan's total exports of crude.

China was among the last batch of Asian buyers that received Washington's exceptions to financial sanctions earlier this month.

But the United States wants importing countries to make further cuts every 180 days in 2013 imports to avoid sanctions, a State Department source said this month.

"Since Zhenrong is already on the blacklist, it fears no more political pressure (to cut)," said a senior Chinese oil trader with direct knowledge of Zhenrong's operations.

The ultimate customer of Zhenrong's Iranian crude supply is state refining giant Sinopec Corp, which has yet to conclude a separate contract with the National Iranian Oil Company.

"The volume will be the same. No change all these years," said the official, who cautioned, however, that actual deliveries could fall below the contract, as in the past months, because Chinese refineries have relied since July on Iranian tankers to ship the oil following a European insurance ban.

The company once linked to the military, whose name "Zhenrong" literally means "boosting the military" in Mandarin, brought the first Iranian cargo to China in 1995, more than a decade before top refiner Sinopec laid hands on Iranian crude.

Zhenrong is also looking into importing Iranian condensate from the giant South Pars gas project from 2013, trading sources said. Condensate is a super light crude oil ideal for making petrochemicals.

"Zhenrong is exploring the business...but not jumping on a term deal yet as the company, being only a trader, not a refiner, still sees it as risky," said a second senior trading source with direct knowledge of Zhuhai Zhenrong's business. (Editing by Clarence Fernandez)

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