|China may raise Iran oil imports with new contract: sources||
China may buy more Iranian oil next year as a state trader is negotiating a new light crude contract that could raise imports from Tehran to levels not seen since Western sanctions were imposed in 2012.
Industry sources say Chinese state-trader Zhuhai Zhenrong Corp, which was sanctioned by Washington in early 2012 for supplying gasoline to Iran, is in talks with the National Iranian Oil Company (NIOC) for a new contract for condensate.
Zhenrong, an affiliate of China's defense authorities in the 1990s, acts largely as an import agent for China Petroleum and Chemical Corp, or Sinopec, whose refineries process Iranian crude.
Zhenrong also buys a small amount for a PetroChina-controlled refinery.
The new condensate contract would be through a subsidiary, Tianjin Zhenrong International Energy Corp, for delivery to independent petrochemical plant Dragon Aromatics in southeast China's Fujian province, the sources said.
Dragon Aromatics since around August has been buying from Zhenrong on a spot basis about 66,000 bpd of condensate produced from Iran's giant South Pars gas project.
"It's almost done, and the volume will be the same," said a trading official with direct knowledge of the supply talks. Senior Zhenrong officials may visit Tehran in the coming weeks to put final touches on the 2014 agreement, the official said.
An increase would go against the spirit of November's breakthrough agreement relaxing some of the sanctions imposed against Iran two years ago over its nuclear program.
The November deal between Tehran and the group known as P5+1 -- made up of the United States and five other global powers -- paused efforts to reduce Iran's crude sales but required buyers to hold to "current average amounts" of Iranian oil imports.
However, it was not clear how much of the light crude would be imported through any new term deal. Zhenrong or others could also continue buying condensate through spot deals.
"The Chinese government may make some noises if overall imports from Iran rise too much, but not if there is a slight increase," said a trader with a Western trading house that sells to China.
Besides the new deal, Iran's largest trade partner and oil customer China is set to roll over its existing import volumes of about 505,000 bpd.
Actual imports from Iran in the first 11 months of this year have been lower at 421,520 bpd, down 0.6 percent on year, according to Chinese customs figures, due to pressure from the Western sanctions. China's total imports from Iran averaged about 530,500 bpd in the year prior to the sanctions.
Of the total for next year, Zhuhai Zhenrong is set to renew its annual supply deal at around 240,000 bpd, not including any new deal for condensate.
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