Iran is moving ahead with plans to expand its share in the global crude market by reaching out to emerging markets such as China's independent refiners who have shored up demand for crude in the world's second-largest economy.
Mohsen Qamsari, deputy for international affairs at National Iranian Oil Company made the remarks on Wednesday, IRNA reported.
Last month, Reuters reported that Trafigura, a Dutch multinational commodity trader, was carrying 2 million barrels of Iranian crude to small, independent refineries in China, also known as "teapots".
Trafigura is the world's third largest independent trader after Glencore and Vitol.
"This shipment (via Trafigura) was the biggest crude consignment to China's private refiners," Qamsari said.
He stressed that oil export via independent trading companies allows NIOC to save hefty leasing costs.
"So far there has been no need for these sources. Warehousing tariffs in China are high, but we may start renting tankers if exports to independent Chinese refiners increase significantly," the official noted.
He added that teapots have "huge capacity" for Iran's crude supplies, but do not have "logistics and financial resources" of state-run Chinese oil companies which explains why shipments should be made through a third party.
"Trafigura has signed a long-term deal and will have to obtain NIOC permit for carrying Iranian crude to any destination."
In a TV interview on Tuesday, President Hassan Rouhani said Iran faced some constraints in selling crude when international sanctions were in place, notably that it could not determine where shipments be made. But Qamsari's remarks hint at a welcome shift in Tehran's oil trade with foreign customers.
He added that breaking into smaller markets such as teapots will help Iran gradually win back its share in the global crude market.
Rising Exports
Once the second-largest producer of the Organization of Petroleum Exporting Countries, Iran slipped to fifth-place after tighter international trade and financial restrictions were imposed in 2011 and 2012 due to the dispute over its nuclear program.
But the lifting of nuclear-related sanctions in mid-January has paved the way for Iran to regain some of the lost ground.
According to official reports, production of crude oil and condensates—a type of light, sweet oil extracted from gas fields in the Persian Gulf— in Iran has reached 4.1 million barrels per day. Exports also stand at about 2.4 million barrels per day, a level last seen in 2011.
China is currently the biggest buyer of Iran's crude with an intake of more than 600,000 bpd, followed by India, South Korea and Japan.
Qamsari said that teapots were not allowed to take in crude oil independent of their government, and only last year, Beijing granted licenses to import crude directly as an effort to boost competition in a sector dominated by state-run groups.
Demand from teapots have accounted for more than half of China's incremental crude purchases this year and have led to long lines of tankers waiting to unload at ports.
The Olympic Target, carrying Iranian crude, completed its journey last month, according to shipping data on Thomson Reuters Eikon. The cargo was expected to be moved into storage tanks and then sold in smaller parcels to teapots, according to sources familiar with the matter.
