Crude Oil from Iran: China wants more independence

2010/03/23

Published on the website of German weekly newspaper “Die Zeit” on 23. March 2010
Source (German): http://www.zeit.de/wirtschaft/2010-03/china-iran-oel
English translation kindly provided by Josh Manning

Beijing is buying less oil from Iran and increasing its business involvement with Iraq. The aim could be to protect themselves from the damage of the UN sanctions against Tehran, says an observer.

Oil field in China. Because its own supply is not enough, the country deals with the Middle East. ©Frederic J. Brown/AFP/Getty Images

by Frank Sieren

The Chinese are changing their oil strategy with the Middle East. For over a year, China has been buying less oil from Iran. During February last year, the rate of oil import by the Chinese amounted to 16.5 percent and since then has continued to sink steadily to only 8.5 percent.

However, Chinese shares have increased with all other major oil suppliers. Meanwhile, Saudi Arabia has become China’s major oil supplier, selling almost twice as much oil to China as Iran.

The Saudis are even supplying less crude oil to the US than they are supplying Iran with, according to a study by the James Town Foundation: “China has reduced its dependency on Iranian oil”, said Israeli Professor Isaac Yitzhak Shichor, author of the study. Iran is still a major oil supplier but “in light of UN sanctions, the Chinese are no longer so dependent on Iran”. The Chinese are preparing for the possible scenario in which it is no longer favorable to place themselves against the rest of the world.

At the same time, China is heavily involved with neighboring Iraq and its development of new oil fields. Out of the ten fields that were auctioned off since June last year, China was able to grab hold of the largest share. According to the Iraq Oil Report, China will also sign contracts for the Missan complex this week which will contain three additional smaller fields. Talks with a Japanese-led consortium, which were until recently still in the race, were abandoned.

Thus the Chinese were able to further extend their lead. They now have over 26 percent of the auction secured reserves. The Russians came out with 14 percent. The US achieved only 12 percent which is less than half than the Chinese. The remaining shares went to other European and Asian countries.

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