Iran is taking steps to ramp up oil exports ahead of an end to US-led sanctions, extending crude contracts with its top two Chinese buyers into 2016 and starting talks with other potential buyers there, sources involved in the talks said.
Sinopec Corp, Asia's largest refiner, and Chinese state trader Zhuhai Zhenrong Corp will together lift around 505,000 barrels per day of crude from Iran in 2016, the same as this year when they took roughly half of the Islamic Republic's total exports, the sources said, Reuters reported.
China bought 536,500 bpd of Iranian crude oil in the 10 months to end October, down 1.9% on a year ago as a third regular client, independent Dragon Aromatics, halted purchases for safety checks after a fire in April.
Iranian oil officials have met in the last two months with traders at PetroChina, the country's second-largest state refiner, and state-run CNOOC, which runs a petrochemical complex with Royal Dutch Shell, three sources involved in the talks said.
China's state-owned energy companies have been reticent to boost contractual volumes or sign up new term deals under the sanctions because of fears about the international repercussions.
But they are becoming less fearful of the political fallout as the prospect of the ban being lifted draws near.
A Zhuhai Zhenrong spokeswoman confirmed the 2016 agreement with Iran. Sinopec declined to comment.
PetroChina's parent company CNPC started pumping oil at Iran's North Azadegan Field around October with estimated flow of 75,000 bpd. An easing of sanctions could allow the company to start lifting its share of production, company sources said.
Under the main China contracts renewed for 2016, Zhuhai Zhenrong Corp is expected to lift an average of 240,000 bpd and Sinopec 265,000 bpd, the sources said. The Sinopec agreement was primarily for crude and a small portion of condensate.
Iran was China's sixth biggest crude supplier in 2015, but faces competition from rivals like Saudi Arabia and Iraq. Iranian oil is more expensive than similar grades from other Middle Eastern suppliers due to its lower sulfur content and slightly higher yield of gasoline, said a senior trader with CNOOC.
