--New NIOC executive to oversee crude oil exports to China
--NIOC also looking to sell more fuel oil to China as other
buyers flee
--Appointment coincides with implementation of western sanctions
aimed against Tehran
(Adds comments from traders, spokesmen for Chinese foreign
ministry and Vitol; context and background throughout.)
By Gurdeep Singh
SINGAPORE--National Iranian Oil Co. will move its top fuel oil
trader to head its Beijing office next month just as Europe's
embargo against Tehran goes into effect, three people familiar with
the matter said Thursday.
Traders said the move symbolizes Tehran's reliance on China as
the buyer of last resort when other customers are scurrying away
due to the threat of sanctions. Besides crude oil NIOC is also
eyeing the Chinese market to absorb its sizable fuel oil
exports.
"It shows where the priority lies for Iran. China is its focus,"
said one of the people.
M. Hojjati, currently NIOC's Fuel Oil Marketing Manager, will be
taking charge July 1, two of the people said, citing an email from
Mr. Hojjati Thursday. He will oversee crude sales to China, NIOC's
largest customer, and may handle other products such as fuel oil as
well, said the third person, with direct knowledge of the
matter.
China has so far defied western sanctions that are aimed at
hurting Iran's oil revenues as a weapon to weaken Tehran's stance
on its nuclear program, something Western governments allege is a
covert attempt to build a bomb. Tehran says its nuclear program is
for peaceful purposes.
"China's imports of oil from Iran is completely fair and
reasonable and does not hurt third parties or the international
community," Chinese Foreign Ministry spokesman Hong Lei said at a
daily press briefing Thursday.
The impending sanctions program is set to bring China into
confrontation with the U.S. Washington has granted exemptions to
several countries from sanctions, which target financial
institutions doing business with Iran's energy sector. However,
Beijing has yet to get an exemption, and the deadline to comply
with U.S. sanctions is June 28.
To make matters more complicated, a day after U.S. Secretary of
State Hillary Clinton said Beijing appeared to be taking steps to
reduce purchases from Tehran, Chinese customs data showed its
imports from Iran were actually rebounding after a brief dip
earlier this year because of a pricing dispute between the two
sides.
Traders say Mr. Hojjati's appointment will intensify NIOC's
efforts to find a market for its fuel oil exports, second only to
crude. Its traditional buyers--traders and oil companies--are
walking out the door one by one as sanctions make doing business
with Iran more difficult. Royal Dutch Shell PLC (RDSB) has stopped
buying crude and fuel oil from Iran, while trading giant Vitol
Group is also expected to stop when the European Union sanctions
take effect in just over a week.
"Vitol is and will remain in compliance with all applicable
sanctions," a spokesman for the company said without commenting on
specific purchases from Iran.
The exit of other major buyers will leave the playing field
empty for Zhuhai Zhenrong Co., China's largest importer of Iranian
crude oil, who's also one of the few remaining buyers of NIOC's
fuel oil.
The U.S. has already imposed sanctions on state-run Zhuhai in
January for allegedly exporting gasoline to Tehran over the last
two years, but traders say the sanctions are unlikely to affect its
business. Iranian fuel oil volumes could be easily absorbed in the
Chinese market as marine fuel or a feedstock for its independent
refiners, traders said.
Meanwhile, the current head of NIOC's Beijing office is expected
to move back to Tehran after a two-year tenure, one of the persons
said. Mr. Hojjati will be succeeded by M. Sharifi as the head of
the company's fuel oil trading team in Tehran, he said in the
email, a copy of which was reviewed by Dow Jones Newswires.
Write to Gurdeep Singh at gurdeep.singh@dowjones.com