Wednesday, August 08, 2012

Iran: 'China not cutting oil purchase from Iran'

Source: IRNA

Deputy Foreign Minister for Asia-Pacific Affaires, Abbas Araghchi says China has not cut its oil purchase from Iran.

Talking to IRNA, Araghchi said a formula has been found to foil the US unilateral sanctions on oil tankers insurance.

“Any new limitation and sanction imposed by the US and Europe might be effective in the short run but would immediately be foiled through Iran's innovative ways and mutual cooperation because the other party does not want to buy energy more expensively.”

Asked Araghchi to comment on the Iran-China relations and some political and international analysts who believe that despite claiming to be a friend of Iran, China has actually voted to the UN Security resolutions against Tehran and in favor of the West.

Iran-China ties are very important and extensive, said Araghchi, adding, “China is an large market, where all types of high quality goods are produced. They do not export low quality commodities to Iran; rather, our traders mport low quality products.”

China-Iran relations refers to the economic, political, and social relations between the modern nations of the People's Republic of China and Iran, from the 1950s to the present day.

Trade and diplomatic relations between the peoples and cultures within these two countries have existed since 200 BC (see Sino-Persian relations).

One of the main pillars of the relationship is oil and gas. China switched to petroleum primarily to get their energy supply off of coal. There was a rapid increase in oil importation from 1974 into the 1990s. Now, approximately 80% of China’s total imports from Iran are oil and the rest is mineral and chemical products. Because of this reliance on Iranian oil and gas, China is now investing in the modernization of Iran’s oil and gas sector to secure access to the resource. The China National Petroleum Corporation (CNPC) was granted an $85 million contract to drill 19 wells in the natural gas fields in Southern Iran and signed another similar $13 million contract. Then again in 2004, an agreement was reached where China would import 270 million tons of natural gas over 30 years from South Par fields which is the richest natural gas fields in the world for $70 billion. Another Chinese company, Sinopec Group, gets half-share in Yardarvaran oil fields worth about 100 billion for the purpose of exploration. Later in 2007, CNPC signed a $3.6 billion deal to develop offshore gas fields in Iran and then signed another $2 billion contract to develop the northern Iranian oil field near Ahvaz. Not only is China helping to develop the oil and gas sector, but China supports Iran’s ambitions to bring Caspian Sea oil and gas to Southern Iranian ports through pipelines so the resources can be exported to Europe and Asia.

China finds in Iran a permanent partner for its exports and a source for its growing energy demand. In March 2004, Zhuhai Zhenrong Corporation, a Chinese state-run company, signed a 25-year contract to import 110 million metric tons of Liquefied Natural Gas (LNG) from Iran. This was followed by another contract between Sinopec and Iran LNG, signed in October of the same year. The deal, worth $100 billion, adds an extra 250 million tons of LNG to China's energy supply, to be extracted from Iran's Yadavaran field over a 25-year period. In January 2009, Iran and China signed a $1.76bn contract for the initial development of the North Azadegan oil field in western Iran. In March the two countries struck a three-year $3.39 billion deal to produce liquefied natural gas in Iran's mammoth South Pars natural gas field. Because of its limited refining capacity Iran imports one third of its refined products such as petrol from China.

In 2001, the volume of trade between Iran and China stood at roughly $3.3 billion, and in 2005, the volume of Sino-Iranian trade hit US$ 9.2 billion. Iran's Deputy Minister of Commerce Mehdi Ghazanfari speculated that trade exchanges between Iran and China will exceed $25 billion in 2008. In 2005, exports from China represented 8.3% of the total import market in Iran, giving China the second largest share of the market after Germany. China's exports to Iran have experienced particularly rapid growth in the past five years, with China replacing Japan as the world's second largest exporter to Iran. Iran's imports from China rose by 360% between 2000 and 2005. China is now responsible for about 9.5% of all Iranian imports. In 1988, the Iranian market opened up to Chinese industry when the PRC began economic restructuring. Once profitable trade relations were established, the PRC invested in Tehran’s subway systems, dams, fishery, and cement factories while Iran helped supply China with the highly desired minerals coal, zinc, lead, and copper. Trade between the two states also included power generation, mining, and transportation equipment along with arms and consumer goods such as electronics, auto parts, and toys. Iran–China trade value reached $45 billion in 2011 and is expected to increase to $50 billion by 2012.

Ali Akbar Salehi, Iran's former representative to the International Atomic Energy Agency, said that the two countries "mutually complement each other. They have industry and we have energy resources".