Wednesday, June 13, 2007

Iran trying to manuever itself into the good graces of larger powers

Iran discusses storing oil reserves in China

KUALA LUMPUR: Iran is in discussions to store strategic oil reserves in China and to build refineries around Asia, Iran's oil minister, Kazem Vaziri-Hamaneh, said Monday, as the country seeks secure outlets for its crude in the face of Western economic sanctions.

He said there was no shortage of crude in the market and that the Organization of Petroleum Exporting Countries had no plans to increase supplies. It was the latest producers' rebuff to calls by consumer nations for more oil.

Vaziri-Hamaneh said Iran was in discussions to store crude in China, which has been building up reserves in the past year.

"We have some plans," he said at the Asia Oil and Gas Conference in the Malaysian capital. Discussions have revolved around China having a role in storing the strategic reserves, he said.

China has completed filling its Zhenhai reserve facility, which has a capacity of 33 million million barrels, and had been scheduled to make the first crude deposit into its second strategic storage facility at Aoshan by the end of May.

China's goal is a reserve of 100 million barrels by the end of 2008.

The crude being stored comes from countries like Angola, Iran and Sudan, shipping sources said.

China's crude imports from Iran are up 11 percent in the first four months of the year, compared with the same period in 2006.

A shift in Iranian sales to China could serve many interests.

China's state-owned refiners would avoid raiding edgy spot markets by instead securing more long-term contracts, and Iran would tighten economic ties with a key UN Security Council member.

Worries over Iran's nuclear dispute with the West have been a driving factor for rising oil prices this year.

But Vaziri-Hamaneh said Iran was not concerned over the financing of mega oil projects in the country, despite economic sanctions over Tehran's nuclear plan.

He said the country's crude output was expected to rise to 5.3 million barrels per day by 2014, up from 4.3 million currently.

Iran has sweetened the terms of oil and gas contracts as it seeks to lure international companies to invest in the country despite political risks, but energy executives say they want more incentives.

The United States has frowned on deals that international companies have signed with Iran as they look to tap the second-largest oil and gas reserves in the world.

The Iranian minister said the reason for current high oil prices was not because of crude supply problems.

"Now there is no shortage of crude oil in the market," he said when asked if OPEC should release more supplies to temper high oil prices, adding that commercial oil stocks in the United States were at a high level.

London Brent crude prices held above $68 a barrel on Monday, after a slide Friday as fears over slower economic growth halted a rally to near nine-month highs over $71 last week.

Asked if oil prices would hit $80 a barrel, Vaziri-Hamaneh said, "We cannot predict what will happen to prices now."

Vaziri-Hamaneh also vowed closer cooperation with Asia, announcing that Iran was in talks to partner with China, Indonesia, Singapore, Syria and Malaysia to build refineries with a combined production capacity of 1.1 million barrels per day.

"We are supposed to be the partner in those refineries, and also try and provide the crude oil to those refineries," he said.

He did not provide further details on these projects, although an official at National Iranian Oil said earlier Monday that Iran aimed to supply crude to a new refinery planned in northern Malaysia.

Vaziri-Hamaneh said Iran had also completed a deal with Essar Group of India to build a new refinery in Iran,.

National Iranian Oil has been in talks with Essar to build an estimated $2 billion refinery with a capacity of 300,000 barrels per day.

Malaysia is considering a new project to expand the capacity of its joint-venture refinery in Malacca, the head of the state oil company said Monday, Reuters reported from Kuala Lumpur.

"We are looking at the possibility of expanding the present capacity but it is still under study between ourselves and ConocoPhillips," the chairman of the Malaysian state energy firm Petronas, Hassan Marican, said at the Asia Oil and Gas Conference.

"We have not confirmed the expansion capacity yet but we are looking at several options," he said.

The chairman of ConocoPhillips, Jim Mulva, said the company did not yet have plans to divest its stake in the refinery after selling its Malaysian retail outlets to Royal Dutch Shell earlier this year.

Original article posted here.

1 comment:

Anonymous said...

Please sign petition to Shell to stop doing business with terrorist regime of Iran!