Page 45 - IRANRptNov19

Surging ship-to-ship oil transfers ‘hint at China buying up Iranian oil despite US sanctions’
Iranian refinery upgrades to Euro-5 petrol output after overhaul
petrochemicals, directly or through its commodity exchange.
While the US sanctions have since last November applied to petrochemicals, it is generally recognised by industry figures that Iran has been finding it easier to export some petrochemicals while attention has been so fixed on oil.
The annual value of Iran's petrochemicals products should rise to more than $25bn with production capacity of more than 100mn mt by 2022, compared with a value of $16bn currently, Zanganeh was also cited as saying. Production of the gas-derived petrochemical feedstock ethane could reach 16mn mt/year in 2021, the minister was also cited as saying, adding that its production stood at 7.3mn mt in 2018.
An insight into how much Iranian oil might be making its way to China via ship-to-ship transfers, in defiance of US sanctions, has been given by new tracking data.
Oil imports subject to such transfers and absorbed by China last month reportedly surged. Some 910,000 tonnes of crude, three times as much as in August, was offloaded at Chinese ports after being transferred in the South China Sea, according to ship-tracking data compiled by Bloomberg. It’s not clear where this oil derived from, but moving crude from one vessel to another at sea is a common way of disguising cargo origins and China, the world’s biggest crude importer, has been struggling to replace lost barrels from Iran and Venezuela, also hit by US sanctions this year.
Oil cargoes from the US arriving in China also dropped markedly last month, the data show. Beijing imposed tariffs on American oil for the first time on September 1 as the trade war worsened.
“I think its highly likely that these ship-to-ship and Malaysian volumes are Iranian or Venezuelan crude,” Bloomberg quoted Michal Meidan, director of the China Energy Programme at the Oxford Institute for Energy Studies, as saying. “But of course the whole point here is to make it hard to be sure.” Washington is not likely to succeed with its campaign to entirely drive Iranian oil exports off world markets and Iran is expected to maintain its shipped crude consignments at 400,000 b/d in the second half of 2019 and 2020, according to a Fitch Solutions Macro Research research note cited by Rigzone on September 10.
“Despite all [Iran oil] exports now being sanctionable, volumes have continued to flow out of Iran to buyers in markets including China, Syria and Turkey,” the note said.
“Exports have become increasingly difficult to track, with tankers routinely turning off their transponders and performing complex chains of ship-to-ship transfers,” the note added.
China has thrown Iran a “vital lifeline” and taken the lion's share of exports in the period since sanctions waivers expired in May, according to the note.
“This is not unexpected, given that Beijing and its state-backed enterprises have the greatest capacity to circumvent US sanctions,” it stated.
Based on Bloomberg's tanker tracking data, around 55% of Iranian oil exports since May have been taken up by Chinese buyers and “we expect this dynamic to remain in play over the coming quarters”, the cited note added.
The Iranian Lavan Refinery, based outside the southern Iranian city of Shiraz, is reportedly now producing Euro-5 quality petroleum for light passenger and commercial vehicles, SHANA reported on October 15. Euro-5, which is now superseded by Euro-6 since 2014, was introduced by the European Union in 2009 as a highly refined fuel with fewer pollutants emitted into the atmosphere. Gasoline-powered vehicles are exempted from particulate matter (PM) standards through to the Euro-4 stage, but cars with direct
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