UPDATE 2-Iran relies on friendly powers for fuel supplies

Thu Jul 8, 2010 11:41pm IST

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* Turkey, China supplying Iran's July gasoline imports

* Smaller supply pool driving up import costs

* Iran may be struggling to import fuel as it wants

(Recasts, adds details)

By Simon Webb

DUBAI, July 8 (Reuters) - Iran is depending more on friendly powers in the international arena for fuel supplies after the U.S. passed far-reaching sanctions a week ago that aim to hinder Tehran's fuel imports and deepen its international isolation.

The Islamic Republic is buying around half of its July gasoline imports from Turkey and the rest from Chinese sellers, oil traders said on Thursday, as most other suppliers have stopped selling due to the U.S. sanctions.

Turkish refiner Tupras began supplying gasoline to Iran in June after a hiatus of at least 18 months, trade sources said, just days after Turkey and Brazil brokered a nuclear fuel swap plant with Tehran designed to quell international fears over the Islamic Republic's atomic ambitions. [ID:nLDE65S0Z3]

Western powers rejected the plan, and Turkey and Brazil responded by becoming the only two countries to vote against the fourth round of sanctions on Iran at the U.N. security council.

China, one of Iran's main trade partners and a permanent member of the security council, signed up to the U.N. sanctions. But before it did so, Beijing demanded the measures were diluted to avoid targeting Tehran's oil and gas industries. Earlier this week, China denounced the United States for imposing its own sanctions on Iran. [ID:nTOE66506O]

"The Chinese are doing this in order to make their own mark," said Iran analyst Meir Javedanfar, an independent analyst based in Tel Aviv.

Iran would import around 90,000 barrels per day (bpd) of gasoline in July, steady from June, oil traders said. It would take around nine cargoes, four or five of them from Turkey and the rest from Chinese sellers, they said.

TRADE PARTNER

Chinese traders have been buying gasoline in the Gulf and elsewhere and selling it onto Iran. Unipec, the trading arm of Chinese refiner Sinopec, is one of those firms, trade sources said last month. [ID:nLDE64T029]

Unipec and state-run Chinaoil restarted direct sales of gasoline to Iran earlier this year, stepping into a void left by fuel suppliers who halted trade under the threat of U.S. sanctions.

Many gasoline sellers stopped trading with Iran in anticipation of the U.S. sanctions. French major Total (TOTF.PA) in June joined the growing list of those that had stopped sales. [ID:nLDE65R1OR] Total had supplied about half Iran's gasoline imports in May.

Royal Dutch Shell (RDSa.L), BP (BP.L), Reliance Industries (RELI.BO) and independent Swiss trader Glencore, were among suppliers that have already either stopped fuel sales to Iran or have made a decision not to enter into new trading agreements with the world's fifth-largest oil exporter.

The limited pool of suppliers was driving up the cost of gasoline for Iran and making it harder for the Islamic Republic to buy the quantities it needs, traders said.

"These restrictive measures mean it is getting very serious for Iran," said Mehdi Varzi, a London-based energy consultant. "The oil market is a big market, and they will always find suppliers, but it is getting more difficult and it is costing more."

Iran may well want to buy more cargoes than it had managed to secure, trade sources said.

"I suspect they would like more cargoes, they are only buying nine cargoes when they used to buy 12 a month," said one oil trader.

Iran is OPEC's second-largest oil producer but relies on imports to meet up to 40 percent of its gasoline needs as it lacks the refining capacity needed to meet domestic demand.

U.S. sanctions aim to target those imports, allowing for the imposition of bans on access to the U.S. banking system, property transactions and foreign exchange in the United States for international suppliers of gasoline to Iran.

The sanctions aim to pressure Iran to halt its nuclear programme. Western powers believe Iran is trying to build bombs under the cover of a civilian nuclear programme. Tehran says its needs nuclear electricity.

The sanctions were also impacting the international flights operated by Iranian airlines. Two Iranian airplanes have been forced to fly from Hamburg airport without refuelling this week, an airport spokesman said on Thursday. [ID:nLDE6671X6}

Washington has not spelled out whether its new sanctions are intended to require firms to refuse to fuel Iranian jets at airports in third countries, but U.S. officials have made it clear they are pleased with reports sanctions had begun to bite.

Two of the gasoline cargoes coming from Turkey were scheduled to load from Turkish refiner Tupras' Izmit refinery, while two or three were scheduled to load from Tupras' Izmir refinery, sources said. The cargoes would be loaded load onto ships owned by the state energy giant National Iranian Oil Company (NIOC), they added.

A Tupras spokeswoman was not immediately available for comment on Thursday. (Additional reporting by Jonathan Saul in London and Ayla Jean Yackley in Istanbul; Editing by Sue Thomas and Keiron Henderson)

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