PetroChina receives second Iranian crude shipment via Myanmar terminal


A second Iranian VLCC discharged its cargo at the Myanmar oil terminal in August, indicating that state-run PetroChina is increasingly using the pipeline through the Southeast Asian country for importing Iranian crude to its refinery in southern China.

The shipment comes at a time when refiners in the rest of Asia are starting to back off from business with Tehran ahead of the November 4 deadline for winding down Iranian oil imports under US secondary sanctions.

The 299,261-dwt VLCC Halti, owned and operated by National Iranian Tanker Co., departed from Kharg Island in Iran on July 21 and arrived at Maday Island in Myanmar on August 3, S&P Global Platts trade flow software cFlow showed. It was anchored in Myanmar till August 19.

The crude oil shipment was delivered to CNPC, the parent company of PetroChina, according to market sources.

The crude will be shipped through the Myanmar-China pipeline to PetroChina’s 13 million mt/year (260,000 b/d) Yunnan Petrochemical refinery, one of the few refineries configured to process Iranian crude.

The refinery received its first shipment of Iranian crude in early June as a test cargo, on board the partly laden VLCC Dore, which is also owned and managed by NITC. The test was successful and paved the way for more Iranian imports.

Earlier this week, executives at state-run Sinopec said refineries that have invested heavily into building secondary units at plants processing Iranian crude will find it hard to obtain alternative feedstock with the same margins as discounted Iranian crude.

OIL TANKER AVAILABILITY SHRINKS

Besides refineries, shipping companies are also wary of conducting trade with Iran due to US sanctions.

US President Donald Trump issued an executive order re-imposing secondary sanctions on August 6. These barred Tehran’s US dollar purchases, precious metals trade and automotive investments.

Transactions covering petroleum have an extended deadline until November 4, 2018, when US sanctions will cover Iran’s port and shipping companies and petroleum-related transactions with National Iranian Oil Co. and NITC, including financial transactions with Central Bank of Iran, and underwriting and insurance services.

This will narrow the pool of vessels shipping Iranian crude even further, reflected in a freight rate premium for any vessels willing to load or discharge cargoes in Iran.

This year, Greek shipowners accounted for the largest number of oil tankers by count that shipped Iranian crude, while NITC’s oil tankers accounted for the largest number by volume, according to shipping brokerage VesselsValue.

Out of the 217 oil tankers that exported Iranian crude in the first seven months of 2018, 81 were Greek tankers and 51 were NITC tankers, and this is likely to drop after the November deadline, VesselsValue said.

The difference can be explained by the size of tankers, as Greek owners largely supply Mediterranean and European refineries on Suezmaxes for shorter voyages, while NITC uses VLCCs to supply Asian refiners on long haul with larger economies of scale.

“The draw of higher freight premiums for Iranian business appears to be quite attractive thus far, particularly in relation to more conventional voyages out of the Middle East,” VesselsValue said. “However, it remains to be seen how much risk appetite remains as the sanction regime picks up speed midway through the fourth quarter of this year.”
Source: Hellenic Shipping News

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