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China is Iran’s largest export market for petrochemicals.
China is Iran’s largest export market for petrochemicals.

Iran Gov’t Seeking Solution for Petrochem Issue With China

Iran Gov’t Seeking Solution for Petrochem Issue With China

The government is keen to help remove trade barriers between private-sector Iranian petrochemical exporters and Chinese buyers, Oil Minister Bijan Namdar Zanganeh said.

Domestic producers in recent months have faced difficulty cashing in on their petrochemical sales to China which, according to Zanganeh, is an economic and not a political issue.

The minister also told IRNA on Friday that the government is looking to liaise with Chinese officials to streamline the payments.

"The issue should be addressed by the private Iranian companies. But the government has stepped in to address the problem associated with delayed payments to petrochemical companies," Zanganeh said.

“It’s not clear [when financial barriers would be removed],” he added, noting that the issue requires the collaboration of Chinese authorities.

The government in China has recently ramped up an anti-graft campaign in its financial sector.

Marzieh Shahdaei, managing director of National Petrochemical Company, said in late June that Iran is keen on expanding petrochemical trade with the world's second-largest economy, but the money transfer issue should be dealt with at the ministerial level.

The move, reported by IRNA, has complicated money transfer for Iran's petrochemical sales, as Chinese banks are wary of possible financial risks associated with dealing with some Iranian banks and companies subject to the remaining US sanctions.

"The subject is expected to be taken up with China's finance minister (Xiao Jie)," Shahdaei recently said without providing details.

The debate comes following a decision by the Financial Action Task Force to extend the suspension of some of its restrictions against Iran. FATF is seen as the international standard-setter in the fight against money laundering.

China is Iran's largest export market for petrochemicals. Close to 40% of the petrochemical exports and 60-70% of its polymer shipments are destined for the world’s second-largest economy.

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