China’s crude oil imports from ship-to-ship transfers soared threefold between August and September to 910,000 tons, Bloomberg reports, citing ship tracking data. The source of the oil, the agency noted, was unclear.
“I think its highly likely that these ship-to-ship and Malaysian volumes are Iranian or Venezuelan crude,” Bloomberg quoted Michal Meidan, the head of the China Energy Programme at the Oxford Institute for Energy Studies as saying. “But of course the whole point here is to make it hard to be sure,” Meidan added.
Indeed, it is no secret that Iran has taken to ship-to-ship transfers in the open sea to avoid U.S. sanctions and continue exporting oil. China is the country’s most important oil buyer, not least because of its trade spat with the United States, and has been openly insisting that it will not stop buying Iranian crude.
China has pledged $400 billion in investments in Iran’s oil, gas, energy infrastructure and transport industries over the next 25 years, seeking to secure a much needed future oil and gas supply for a country whose domestic production cannot come close to satisfying its growing needs.
Washington has not been turning a blind eye to that. At the end of last month, Washington announced sanctions on several Chinese tanker operators on allegations they had violated U.S. sanctions against Iran and had shipped Iranian crude. The move sent shipping rates soaring.
Yet Iran is not China’s only controversial supplier of crude. Asia’s number-two economy has been financing Venezuela’s government under an oil-for-cash scheme and although Venezuela has struggled to continue serving this obligation, chances are it has found a way to bring the crude to China, with ship-to-ship transfers once again a convenient way to avoid detection.
Unsurprisingly, as ship-to-ship transfers expanded, imports of U.S. oil fell in September. That was the month when China launched tariffs on U.S. crude un response to the latest round of U.S. tariffs.
By Irina Slav for Oilprice.com
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