National Iranian Oil Co. Starts Selling Oil to Italy's Eni

The National Iranian Oil Company sold the first cargo of crude oil to Italy's oil giant Eni after the removal of sanctions in January, director for international affairs at NIOC said on Monday.

“NIOC has signed a short-term contract with Eni to sell crude as it seeks to revive the agreement it had with the Italian company before the imposition of international sanctions,” Mohsen Qamsari was quoted as saying by Mehr News Agency.

Eni stopped importing oil from Iran in 2012 after economic sanctions were tightened in 2011 and 2012.

"Should a long-term deal be signed, we are ready to supply 100,000 barrels of crude oil per day to Eni," Qamsari said, noting that negotiations are underway to sign a long-term contract with the Italian refiner.

Asked about a crude export contract signed with Italy's Saras, which will take effect in 2017, Qamsari said, “NIOC is ready to supply Saras with 65,000 barrels of oil per day, but their demand may range from 30,000 to 60,000 bpd.”

According to Dario Scaffardi, Saras' general manager, Iran used to account for a significant part of Saras crude feedstock before international restrictions hurt the key oil sector.

"We have already been contacted to prepare contracts," he noted, adding, "Don't underestimate Iran ... they will be able to ramp up production quickly and efficiently."

Asian, African Customers

On resuming oil exports to customers in Asia and Africa, Qamsari said Sri Lanka is in talks with Iran to resume crude imports while South Africa has still not done so.

According to reports, Sri Lanka's crude demand is around 50,000 barrels a day and the country's biggest oil refinery has roughly the same processing capacity.

Iran used to supply 40,000-45,000 bpd of oil to Sri Lanka, more than 90% of the its oil demand, but sanctions significantly curtailed Iran's footprint in the region and paved the way for other Persian Gulf producers, such as OPEC's de facto leader Saudi Arabia, to dominate the Lankan crude market.

Iran and Sri Lanka have explored grounds for strengthening energy ties in the post-sanctions era, but  no contract has been concluded between the two sides.

The official also stressed that oil giants hold the lion's share in African refineries, adding that talks have been held with American and European oil majors such as Shell, BP and Chevron to export oil to South Africa.

"In case of finalizing an agreement with Shell, Iran will supply a part of Shell's crude to its refineries in South Africa," Qamsari said.

Asked about selling oil to American refineries in South Africa, including those owned by Chevron Corporation, he said as per Iranian law there is no restriction on doing business with US companies.

South Africa has been one of Iran's traditional customers and imported 380,000 barrels per day from Iran prior to the sanctions.

According to Thembisile C. Majola, South Africa's deputy energy minister, a majority of her country's refineries are run by oil giants such as BP, Total and Chevron, which can start buying crude from Iran should South Africa's Energy Minister Tina Joemat-Pettersson open talks on the issue.