An estimated 65 percent of revenues from crude oil export to China will be used to import Chinese goods and the balance will be paid to Tehran in cash as per a new long-term contract signed between the two countries, head of Iran-China Chamber of Commerce and Industries, Assadollah Asgarowladi said Monday.
The cash amount can also be utilized to purchase goods from other countries, including South Korea and Japan albeit after authorization from the oil ministry to the Central Bank of Iran.
As part of the earlier settlement for crude purchases from Iran, China opened lines of credits for Iranian projects. As such, Beijing should provide up to $70 billion for projects inside Iran in lieu of its $22 billion oil debt. The allocations are for both the public and private sectors.
"Now we have no more blocked oil revenues in China," Asgarowladi said, adding that several companies and projects have so far benefited from Chinese finance with help from the Bank of Industries and Mines, which makes the arrangements for opening of LCs.
China is the biggest oil importer from Iran and has an outstanding balance on previous contracts. It reportedly owes between $23.2 billion to $28.3 billion to Iran and has been committed to finance Iranian projects triple this amount. Iran aims to recover part of its oil revenues from China by allowing the Asian economic giant to fund key energy development projects.
Transfer of Knowledge
Iran and China have signed a memorandum of understanding based on confidentiality and professional secrecy concerning import of technical knowledge for producing propylene from methanol from China, deputy managing director of the National Petrochemical Company (NPC) said.
In China ethylene and propylene are produced from methanol, although the production activities are based on coal rather than natural gas, Mohammad Hassan Peyvandi was quoted by Fars news agency as saying.
Sanctions imposed on Iran's energy sector have given rise to production of surplus methanol in the recent past.
"There will be no more methanol in Saudi Arabia or Qatar, as Saudis are focused on petro-refineries, while Qatar is generally heedless of methanol production. Therefore, Iran will soon emerge as a major methanol producer."
Referring to the MoU, Peyvandi said Iran should not miss the opportunity and work towards indigenizing the technical technology to produce propylene from methanol so that it can gain leverage in global propylene production.
The NPC plans to raise methanol production capacity by 10 million tons, or 17 percent, in the next five years as several projects come on stream. The world’s largest methanol plant, Kaveh methanol project, is currently being implemented in the Persian Gulf city of Bandar Dayyer, and is expected to produce two million tons of methanol per annum or 7,000 tons per day once completed.
Iran exports petrochemical products to more than 60 countries. The main destinations include the Far East, Central Asia, Southeast Asia and Africa. According to global estimates, Iran holds 24 percent of Middle East's and 4.2 of the world's petrochemical production capacity. The country's main petrochemical exports include methanol, urea, polyethylene and aromatics.
