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Iran crude exports plunge in January

Tehran, March 3, 2013

Iran's crude oil exports fell in January from a post-sanctions high in the previous month, analysts and shipping sources said, due to refinery maintenance in China and the onset of another round of US sanctions.

Exports dropped to around 1.1 million barrels per day (bpd) in January, according to three industry sources who track oil flows and shipping and country import data compiled by Reuters.

The January figure represents a drop from at least 1.4 million bpd in December and indicates a rebound at the end of 2012 could be short-lived. It is also around 200,000 bpd lower than an initial Reuters estimate of Iranian exports in January.

"There was a little bit of a pick-up in the fourth quarter, but it has come right down again," said a source with a major oil company who declined to be identified. "My suspicion is things are getting worse rather than better."

Western sanctions aimed at curbing Iran's nuclear programme halved Iran's oil exports in 2012 from 2.2 million bpd in 2011, leading to billions of dollars in lost revenue and a plunge in the Iranian currency.

Still, robust demand from top buyer China and others such as India and Japan, as well as the purchase of new tankers, allowed the Islamic Republic unexpectedly to boost exports to at least 1.4 million bpd in December.

But shipments have started 2013 sharply lower than December's rate, which was the highest since shortly before European Union sanctions on Iran took effect last July.

"We think January exports dropped to around 1.0 million bpd, mainly because of lower imports from China due to refinery maintenance," said analysts at consultancy FGE, providing the lowest estimate for January.

Two of the sources said Iranian shipments came under further downward pressure in February - although with the caveat that little data was available yet. A new round of U.S. sanctions took effect earlier this month.

As well as the recent tightening of sanctions, natural declines at ageing oilfields have for a number of years weighed on Iranian supply, analysts say.

"I don't think they have the financial resources or the equipment to keep up their output," said Paul Tossetti, senior energy adviser at PFC Energy, who expects to see February supply down slightly.

China cut

Official Chinese data showed the country bought 310,000 bpd of Iranian crude in January, the lowest in 10 months. The biggest reduction in Iranian exports in January was to China.

The overall level of Iranian exports in January looks to be slightly higher than the lowest estimates. The International Energy Agency, which advises 28 industrialized countries, earlier in February said exports could have fallen below 1 million bpd in January.

To be sure, estimates of Iranian exports can vary considerably and are often revised. Keeping track of them has become more difficult since the tightening of sanctions in 2012.

The IEA, in its February 13 report, said Iranian production could fall in coming months after the implementation of new sanctions on Feb. 6 by the United States.

The new sanctions effectively bar Iran from repatriating earnings from its oil exports, requiring customers to pay funds into an escrow account at a bank in the purchasing country and limiting Iran's use of the proceeds to buying goods in the countries where it exports its oil.

No matter how many sanctions are applied, there is always room to find ways to live with the curbs - such as Iran's expansion of its tanker fleet and buyers' efforts to work around EU measures affecting insurance.

FGE, the consultancy firm, is more upbeat on the potential for exports than some in the industry.

"The expanded fleet may help the crude go to destinations Iran used to export to, but couldn't due to limited tanker capacity. Iran can insure the deliveries - there is no problem with that," FGE said.-Reuters




Tags: Iran | Exports | Crude | Sanctions |

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