China's July oil imports from Iran fall 28 percent on month

BEIJING Tue Aug 21, 2012 7:33pm IST

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BEIJING (Reuters) - China's crude oil imports from Iran fell nearly a third in July from an 11-month high in June, ensuring that the world's second-largest oil consumer continues to meet the terms of a waiver from the United States on financial sanctions.

The United States and Europe have levied tough sanctions on Iran in a bid to choke off oil revenues and halt a controversial nuclear program the West fears is aimed at developing atomic weapons, although Iran has denied this.

Another month of rising imports could have jeopardized a last-minute waiver the United States granted China for six months from June 28, after Iran's top oil buyer showed significant cuts in imports from the Middle Eastern country.

"China's crude imports from Iran recovered quickly in May and June," said a Beijing-based oil analyst who declined to be identified because he was not authorized to speak to the media.

"The Chinese government might have had some pressure of not boosting imports too much because the United States had just given China a waiver."

The strong June imports by state-owned firms had fuelled speculation China might go on a buying spree for more Iranian crude ahead of a July 1 European Union deadline barring insurance firms from covering Iranian crude shipments.

"The biggest guideline given is that overall imports from Iran should not deviate too much from the contract volume, although Sinopec may want to buy more when Iranian oil is cheap," the analyst added.

China bought 1.93 million tonnes of Iran's crude in July, equivalent to about 454,500 barrels per day, against 632,618 bpd in June, data from the General Administration of Customs showed. <O/CHINA1>

IMPORTS DOWN 22 PCT YEAR-TO-DATE

China's purchase represents about 41 percent of Iran's estimated total exports of 1.1 million bpd in July.

However, the average of June and July imports was around 540,000 bpd, mostly in line with contract volumes.

Imports in the first seven months stood at 433,450 bpd, or 22 percent below levels a year ago, principally because of sharp first-quarter cuts made as China and Iran wrangled over contract terms.

The July crude cargoes from Iran, most of which were loaded in June, were the last batch before the EU sanctions swung into operation on July 1.

Shipments in July were also lower than a forecast by Geneva-based oil consultancy Petro-logistics, which pegged China's July-arriving purchases at 590,000 bpd. Oil cargoes usually take about 22 days to get to China from Iran.

China will lift at near full contract volumes of about 510,000 bpd for July and August, industry officials told Reuters this month, with the Iranian side providing shipping and third-party insurance and supplying China on a delivered basis.

(Editing by Clarence Fernandez and Fayen Wong)

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