UPDATE 2-Iran fuel imports nosedive as sanctions bite-source

Mon Jul 26, 2010 5:11pm GMT
 

* Imports 3 cargoes of gasoline in July

* Imports gasoline from Venezuela

* Needs to invest in gasoline-producing units to cope (Adds details on Venezuela sales, paragraphs 17-18)

By Amena Bakr and Luke Pachymuthu

DUBAI/SINGAPORE, July 26 (Reuters) - Only three cargoes of gasoline have reached Iran so far in July, according to a shipping document seen by Reuters, much less than the seasonal norm, as new sanctions divert ships carrying fuel.

A series of sanctions agreed since June over Iran's disputed nuclear program target the country's oil trade and industry, making it harder to do business with the Islamic Republic. The EU formally adopted its latest measures on Monday. [ID:nLDEGN5506]

Iran is the world's fifth-largest crude exporter, but has to import around 40 percent of its gasoline needs because it does not have enough domestic refining capacity.

Traditionally during the summer holiday driving season, Iran needs 11-13 cargoes a month, a Dubai-based trader told Reuters.

The document seen by Reuters showed only three cargoes of gasoline had arrived this month and were supplied by Turkish refiner Tupras and Unipec, the trading arm of China's Sinopec.

The companies were not immediately available to comment.

Another cargo is expected to arrive from Venezuela at the Iranian port of Bandar Abbas, two Gulf-based traders said.

They were not aware any other cargoes were heading to Iran.

"The new rounds of sanctions are making things hard right now, and many ships are being diverted, so Iran is only getting a fraction of its actual summer demand," said a trader.

Earlier this month, the owner of a gasoline tanker refused to let the vessel sail to Iran from Turkey.

"Owners of ships are really worried right now about sending shipments to Iran and that's why Iran is looking for alternative companies and countries to import from," said a Gulf-based trader.

As the pressure has mounted on Tehran, the insurance market Lloyd's of London said it would not insure or reinsure petroleum shipments going to the country.

Lloyd's, which has 15 to 20 percent of the global marine insurance sector, is seen as a major influence on other insurance markets with more players pulling back from offering cover to Iran.

Major shipping associations have also created clauses in contracts that enable ship owners to refuse to deliver refined petroleum cargoes to Iran.

ADAPTING TO CHANGE

Industry sources and analysts have anticipated some of Iran's traditional suppliers, such as China and Turkey, would stay loyal.

Although shipments from distant Venezuela are more costly, the South American country is regarded as a natural ally of Tehran. [ID:nN25343897]

Both countries are OPEC members, have close diplomatic ties, and agreed last year to invest $760 million in each other's energy sectors.

Venezuela has pledged to export 20,000 barrels of gasoline a day to Iran, and those shipments started last November. Venezuela has had to import oil products since last year due to a series of problems with its refinery network, meaning it may not have the capacity to boost shipments quickly.

Iran also can adapt by upgrading its refining capacity, although this requires time and investment. For the shorter term, Iran can curb demand by reducing the quotas of gasoline available at fully subsidized prices.

The Iranian oil ministry has already said demand is on a falling trend. In June, it said average consumption since March had been 63.1 million liters, down 2.7 percent year-on-year.

Its website said total daily production was 45 million liters, meaning about 18 million liters needed to be imported each day.

Standard gasoline cargoes are 33,000 tonnes or around 45 million liters, traders said, so one would provide around 2-1/2 days of import needs.

Other strategies for plugging the gap include smuggling refined products by land. Trucks filled with fuel have managed to find a way into Iran despite a pledge by Iraqi Kurdistan to crack down on smuggling activities.

Asked about gasoline imports, an official from the National Iranian Oil Co. said on Monday there was "no sign of difficulties."

He also said crude exports were continuing to China and Europe.

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