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Iran tensions mean 'it's time for China to diversify' crude sources

By Zhou Yan (China Daily)

14:17, January 06, 2012

BEIJING - With tensions rising between Western countries and Iran and geo-political risks increasing, it's time for China to further diversify its crude oil import sources, industry experts said.

The European Union (EU) reached a preliminary agreement to impose sanctions against Iranian oil exports, Reuters reported, a move that drove Brent crude oil prices higher. A final decision on sanctions is expected by the end of this month.

Sanctions against Iran would inevitably affect China, which would probably reduce its reliance on that nation due to political pressure, said Niu Li, a senior economist with the State Information Center.

Iran, which is China's third-biggest crude source after Saudi Arabia and Angola, exported 420,000 barrels of oil a day to China in 2010, supplying 9 percent of China's total imports, according to the Economics & Technology Research Institute of China National Petroleum Corp (CNPC).

Iran is the second-biggest oil producer in the Organization of Petroleum Exporting Countries. Its estimated oil output is about 3.6 million barrels a day, according to a research note from Standard Bank of South Africa Ltd.

China spent $15.85 billion buying oil from Iran in the first nine months of 2011, up 84.5 percent year-on-year. Oil imports from Saudi Arabia increased just 19.7 percent, while those from Angola rose 0.28 percent, Chinese customs data show.

China's State-owned oil companies, including CNPC, China Petrochemical Corp and China National Offshore Oil Corp, recently slowed the pace of their investment in Iran, reflecting concerns about the uncertain situation, said Song Zhichen, an analyst at China Investment Consulting.

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Leave your comment3 comments

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PD User at 2012-01-0950.99.107.*
China has an opportunity to increase supply from Canada.
wende at 2012-01-0671.255.81.*
China should not retreat from its importation of crude from Iran. This will fall into US trap. US is using force to secure its oil as Iran is number 2 in oil export. The west does not use trade anymore but wars to get what they want. China"s retreat will encourage them all the more. There must be ways to continue to trade with Iran.
elee at 2012-01-06183.39.44.*
It is virtually a strategic strangle on China by perceived "enemies" against Chinese interests and growth. One way is to reduce all imports of vehicles from every other nations exporting vehicles to China. Reduction in vehicle oil consumption will in effect improve the environment, o_zone and lessen pressures from foreign big nations.

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