June 21, 2012 / 8:23 AM / 8 years ago

UPDATE 2-China Iran oil imports recover, recoup earlier fall

* May Iran imports -2.3 pct yoy, Jan-May down 25 pct

* Imports up 34.5 pct vs April after payment dispute ends

* Recovers to offset plunge in shipments in first quarter (Adds comments, details)

By Judy Hua and Fayen Wong

BEIJING, June 21 (Reuters) - China’s crude imports from Iran recovered in May to offset a first-quarter plunge in shipments to nearly half the annual average, after the two nations resolved a wrangle over the terms of annual oil sale contracts.

Yet imports in the first five months fell a quarter from a year ago, with U.S. Secretary of State Hillary Clinton saying China was slowly but surely taking action to cut reliance on Iranian crude. Total shipments for the year are expected to stay low as the country’s top buyer rejected Tehran’s offer of discounted oil.

The United States and Europe have imposed heavy sanctions to force Iran to stop its controversial nuclear programme they believe is designed to develop atomic weapons. The West wants Iran’s top oil consumers to cut imports to stem the flow of petrodollars.

Tehran’s top customers, China, Japan, South Korea and India, have all cut imports this year as sanctions make it impossible to finance the deals, find tankers and arrange insurance cover to ship the crude. All three, expect China, have earned a waiver from being cut off from the United States’ financial system for reducing Iranian imports.

“Eventually, the United States will still grant a waiver to China,” said a Beijing-based oil analyst.

Imports in May fell 2.3 percent from a year earlier to 521,936 barrels per day (bpd), customs data showed on Thursday. They totalled 389,857 bpd in the January-May period, and had slumped to 346,183 barrels per day (bpd) in the first quarter.

Chinese refining giant China Petroleum & Chemical Corp (Sinopec) settled its contract dispute with Iran towards the end of the first quarter.

The company has turned down subsequent offers for discounted Iranian crude, insisting ties with the United States were more important than cut-price oil.

Customs data showed that Iranian oil shipments in May were up 34.5 percent, or 133,902 bpd, from 388,034 bpd in April, after Iran and Beijing resolved disputes over annual contracts.

China has been scouring the world for crude to make up for the lost Iranian oil. Its extra imports in May from other Gulf countries, West Africa and Latin America more than offset the loss of imports from Iran, the data showed.

China imported 1.03 million bpd of crude oil from top oil exporter Saudi Arabia in May, 12.4 percent higher than a year earlier but down about 3 percent from 1.07 million bpd in April, customs data showed.

Imports from Iraq surged 64 percent on the year to 466,831 bpd last month and those from Oman rose 51 percent to 424,056 bpd.

Similarly, imports from Angola rose 40 percent on the year to 925,540 bpd last month and those from Venezuela surged 81 percent to 373,218 bpd, the data showed.

Separately, Unipec has requested that Iran deliver July-loading crude cargoes to Chinese ports, ahead of a European insurance ban on Iranian oil exports that takes effect from July 1, a move that suggested China has yet to work out a permanent way to obtain cover for China-flagged tankers that have been transporting at least part of the Iranian oil. (Writing by Manash Goswami; Editing by Clarence Fernandez)

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