July 14, 2015 / 2:00 PM / 4 years ago

UPDATE 1-European refiners ready to welcome return of Iranian crude

* European refineries halted Iranian crude buying in 2012
    * Iran wants to retrieve market share after sanctions

 (Adds Saras comment)
    By Ron Bousso
    LONDON, July 14 (Reuters) - Mediterranean refiners are
gearing up to welcome the return of Iranian crude oil to the
market which could push prices lower and boost profits following
the easing of Western sanctions under a landmark nuclear deal.
    Iran's crude exports were a regular fixture for European
refineries before Western sanctions were imposed on the key OPEC
producer in 2012 over its nuclear programme, halving its exports
to just over 1 million barrels per day. 
    "Iran has been a long standing valued partner ... We are
looking forward to Iran coming back to the market," said a
spokesman for Greece's biggest refiner Hellenic Petroleum
, stressing that they will not buy any crude before
sanctions are officially lifted.
    "The volumes of crude oil that will re-enter the
Mediterranean market will ease prices and give more options for
refiners in the region," he added.
    Though there were no details on how sanctions on oil will be
eased, Iranian officials indicated they would try to maximise
crude exports to Europe and restore a market share of over 40
percent there. 
    Analysts expect the deal could see Iran increase its oil
exports by up to 60 percent within a year. 
    Additional volumes of crude would only pile pressure on a
market already facing a large oversupply. For refiners, however,
cheaper feedstock means higher profit.
    Iranian crude accounted for around one quarter of Hellenic's
crude oil intake before 2012, and just like many Mediterranean
refiners, it is geared up for Iranian crude.
    European oil buyers, including Italy's Eni and
Saras have held talks with National Iranian Oil Company
(NIOC) officials in Europe and Tehran over the past year in
anticipation of sanctions being eased.
    A spokeswoman for Spain's Compania Espanola de Petroleos
(CEPSA) said "Iranian crude has largely been part of our supply
and we maintained a long commercial relationship with them."
    "If sanctions are lifted, as it seems, Iranian crudes will
definitively be again another alternative to consider," CEPSA
told Reuters in a statement.
    A spokesman for Saras said the independent refiner "would be
delighted if Iranian oil comes back to the market, as its
quality is very interesting for complex and flexible refineries
like ours".
    Asian buyers, notably China, India and Japan, have continued
to buy limited volumes of Iranian crude in recent years.
    "Two to three months from now, you will probably see some
Iranian crude coming to Europe and Asia," said Eshan Ul-Haq,
senior market consultant with KBC, which expects Iran's export
to rise over that period by 300-400,000 bpd, of which 150,000
bpd is expected to reach Europe. 
    "It would mean cheaper crude for Mediterranean refineries,
especially smaller countries that have been impacted by economic
problems - like Greece," Ul-Haq said.
    Royal Dutch Shell, whose officials recently held
talks in Tehran on future cooperation and the repayment of the
Anglo-Dutch company's $2 billion debt said on Tuesday it was
interested in doing business in Iran. 
    "Strictly within the boundaries of the law, we are
interested in exploring the role Shell can play in developing
Iran's energy potential," a spokeswoman said. 
    
    The table below shows the Iranian crude oil imported by
companies in Europe, including Turkey, prior to the 2012
European oil embargo. 
    Figures in '000s of bpd are based on industry and Reuters
estimates.

 Customer    Country     Volume '11
                         
 Tupras      Turkey      200
                         
 Total       France      100
                         
 Shell       UK/NL       100
                         
 Hellenic    Greece      80
                         
 Cepsa       Spain       70
                         
 Motor Oil   Greece      60
                         
 Repsol      Spain       30
                         
 ERG         Italy       30
                         
 Iplom       Italy       30
                         
 ENI         Italy       20
                         
 Saras       Italy       20
                         
 Total                   740
 
    

 (Additional reporting by Libby George, editing by David Evans)
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