Iran oil waivers: How India, China are lining up after US exemptions

Iran oil sanctionsArmed with waivers to keep importing Iranian oil without running afoul of US sanctions, some of the Islamic Republic’s top customers are preparing to buy.The exemptions mean at least some supplies from OPEC’s third-biggest producer will keep flowing into international markets, after its exports plunged almost 40 per centsince April — the month before Washington announced the curbs. In a bid to keep customers, the state-run National Iranian Oil Co. has been offering record discounts on its crude.Almost all major buyers of Iran’s oil had negotiated with the US for the waivers, arguing that cutting purchases to zero would affect their energy industries and boost fuel costs. US Secretary of State Michael Pompeo has defended the exemptions and said the Trump administration’s campaignto pressure Iran has already reduced exports by over 1 million barrels a day and they’ll continue to shrink.A summary of plans by some of Iran’s biggest oil customers and what they may buy under the waivers is set out below. This story will be updated as new information becomes available. The exemptions have been granted for 180 days, and will be reviewed toward the end of the period.South KoreaWaiver: Up to 200,000 barrels a day of condensatePurchases before sanctions: 300,000 barrels a day (condensate) in 2017While the Asian country was the third-biggest importer of Iranian oil, it was the first major buyer to cut purchases to zero as the US prepared to impose sanctions. It’s now allowed to buy as much as 200,000 barrels a day, though actual imports may not be that high.Purchases must be limited to cargoes of condensate, a type of ultra-light oil that’s critical for South Korea because many of the nation’s plants are geared to process it. The country bought about 300,000 barrels a day of South Pars condensate from Iran in 2017.The government is said to be in discussion with companies to decide how to split the import volume. They’ll maintain a won-based payment system with Iran, making deposits into local escrow accounts in Industrial Bank of Korea and Woori Bank. The money won’t directly go to Iran, which can only use it to buy food, medicine or other non-sanctioned goods from its customers.chartIndiaWaiver: Up to 300,000 b/dPurchases before sanctions: 560,000 b/d in Jan.-Oct. 2018The South Asian nation was one of the most vocal negotiators for an exemption from the US, as the government faced protests over rising fuel costs before national elections next year.Under the exemptions, it will be allowed to import as much as 300,000 barrels a day. That’s under Iran’s average daily exports to the nation of about 560,000 barrels this year, and almost 450,000 barrels in 2017, shipping data compiled by Bloomberg show.
ALSO READ: Exempted some countries from Iran sanctions to keep oil prices down: TrumpIndian refiners are expected to buy about 9 million barrels of oil for loading in November from Iran. They too will make payments into a local escrow account for the crude supply.ChinaWaiver: 360,000 b/dPurchases before sanctions: 658,000 b/d in Jan.-Sept. 2018The biggest buyer of Iran’s crude is allowed to import 360,000 barrels a day under the exemptions, according to people with knowledge of the matter. That doesn’t include oil produced by projects in the Islamic Republic in which Chinese companies have equity.
ALSO READ: Iran sanctions: Experts hail US exemptions to India for Chabahar portWhile China had bought about 658,000 barrels a day over the first nine months of this year, the government was said to have told at least two state oil companies to avoid purchasing the producer’s oil before the sanctions went into effect. That decision preceded an upcoming meeting between President Xi Jinping and US counterpart Donald Trump and coincided with flaring trade tensions between the countries. Chinese ship owners had also stopped hauling Iranian oil.JapanWaiver: TBCPurchases before sanctions: About 160,000 b/d in Jan.-Sept. 2018The nation’s refiners are likely to restart imports of Iranian oil now that it’s one of the eight recipients of exemptions, Minister of Economy, Trade and Industry Hiroshige Seko told reporters on Tuesday.While JXTG Holdings Inc., the country’s biggest refiner, echoed that view, it’s still considering whether to resume purchases from the Persian Gulf state, according to Senior Vice President Yasushi Onoda. If the company decides to import, oil will arrive in Japan as early as January, after it makes nominations in December or the following month, he said.
ALSO READ: US warns ports, insurance cos to stay away from Iranian shipsJapanese processors halted purchases of Iranian crude in October under US pressure. The Asian nation cut shipments in order to get the waiver, Finance Minister Taro Aso said on Tuesday.TaiwanWaiver: TBCPurchases before sanctions: About 16,000 b/d in Jan.-Aug. 2018The chairman of Formosa Petrochemical Corp., Taiwan’s only publicly traded oil refiner, didn’t seem in too much of a rush to buy Iranian oil even though the island got a waiver.“We don’t dare to sign any more contracts to buy Iranian crude oil after President Trump’s threat,” Chen Bao-lang said on Tuesday. “But it’s not an issue for us, whether Taiwan got an exemption or not. It’s very easy to find alternatives.”
ALSO READ: US determined to push Iranian oil exports to zero without price spike: HookTaiwan has been weaning itself off the Islamic Republic’s crude for the past 10 years. In 2003, Iran’s share of imports peaked at around 18 per cent. So far this year, the Persian Gulf state made up just under 2 per cent.chart
Source: Business Standard