* Libyan crisis gives Iran chance to sell unsold crude oil
* At least 20 mln barrels of Iran crude in floating storage
* European refiner Saras confirms taking more Iranian crude
By Parisa Hafezi and Christopher Johnson
TEHRAN/LONDON, Feb 25 Iran is taking advantage
of Libya's turmoil and dwindling exports to sell more crude that
it has found difficult to offload due to economic sanctions.
Unrest in Libya has slashed a big chunk of its crude oil
output of 1.6 million barrels per day (bpd), with estimates of
capacity shut down ranging from 500,000 to 1.2 million bpd.
Ahmad Ghalebani, Iranian deputy oil minister, said on Friday
Iran had already seen an increase in demand following political
upheaval in the Arab world.
"Demand for Iran's oil has increased," Iran's semi-official
Mehr news agency quoted Ghalebani as saying.
Italian oil refiner Saras SpA (SRS.MI), traditionally a big
buyer of Libyan crude oil, said in a Reuters interview on Friday
that it was looking at replacing oil shipments from Libya and
had already slightly increased sour crude supplies from Iran.
Saras General Manager Dario Scaffardi said his company was
also looking at Kazakhstan, Azerbaijan, West Africa, Algeria and
the North Sea for possible crude replacements for Libyan oil.
The United States has led a drive to isolate Iran through
international sanctions and bring it to the negotiating table
over its nuclear programme.
The sanctions have targeted payments to Iran via the
financial system, and this has made it more difficult for Iran
to sell its crude abroad, forcing it to store large volumes of
its oil at sea in very large crude carriers (VLCCs).
Many international oil companies are unwilling or unable to
take Iranian oil, but others are less constrained, particularly
in Europe and Asia.
Analysts say Iran is well placed to take advantage of the
reduction in Libyan oil exports.
Although Libyan crude is typically high quality with
relatively small amounts of corrosive sulphur compounds and
Iranian crude is typically lower quality, Iranian oil is readily
available and near to key European markets.
Iran has been storing large quantities of oil in tankers at
sea, some of them off its Kharg Island in the Middle East Gulf
and some of it in the Mediterranean.
Ship brokers and agents say Iran has at least 20 million
barrels of crude, mostly Iranian Heavy, at sea in 10 VLCCs and
up to another 20 million barrels in shorter-term storage.
"The Iranians sell most of their oil on a landed basis,"
said Leo Drollas, chief economist at the Centre for Global
Energy Studies in London.
"They store their oil offshore or bring it closer to their
clients. So the oil is already near their customers," Drollas
said. "Something like this happens and suddenly - Bingo!"
A source at the Iranian oil ministry told Reuters Iran
planned to divert some cargoes to Italy and other countries.
Asked about sanctions, the source said: "This is not a time
to be talking about sanctions. The world needs our oil and we
are ready to step in just like any other OPEC member country."
Iran is unlikely to be able to increase oil production
significantly as a result of the higher demand and rise in oil
prices, which pushed the North Sea Brent futures benchmark
LCOc1 to around $112 per barrel on Friday.
Ghalebani said Iran would respect its output target as part
of the Organization of the Petroleum Exporting Countries.
Iranian oil output in January was 3.64 million bpd,
according to Reuters' monthly survey of OPEC producers [OPEC/O],
down from 3.67 million bpd in December and compared with an
implied OPEC target 3.34 million bpd.
Drollas said Iran's output capacity may now be only around
3.75 million bpd and that he expected its output capacity to
fall towards 3.6 million bpd by the end of this year.
(Writing by Christopher Johnson; additional reporting by Amena
Bakr in Dubai, Stephen Jewkes in Milan and Jonathan Saul in
London; editing by Jane Baird)