Despite the announced tender and…
While traders are anxious about…
Greece, once a leading European customer of Iranian oil before the imposition of Western sanctions in 2012, will be the first European country to resume buying Iranian crude now that the sanctions have been lifted.
The country’s biggest oil refiner, Hellenic Petroleum (HELPE), will resume purchases of crude from the National Iranian Oil Co. (NIOC). The deal was announced after a meeting Friday between Amir Hossein Zamaninia, Iran’s deputy oil minister for international affairs, and Greece’s deputy oil minister, Panos Skourletis, in Athens.
Deliveries will begin immediately under a “long-term agreement,” HELPE said in a statement, though it didn’t say how long that term would be. The refiner was one of Iran’s significant buyers of crude before the sanctions regime began in 2011, importing about 20 percent of its oil needs from the Islamic Republic. It owns three of Greece’s four oil refineries.
Related: OPEC’s Trillion Dollar Mistake
Shana, the news service of Iran’s Ministry of Petroleum, said Greece also will settle debt to Iran in unpaid imports it ran up before the sanctions were imposed, forbidding it to pay arrears to Iran. That amounts to between $550 million and $600 million, although Platts estimates the debt at more like $755 million.
The sanctions were imposed as an incentive to help persuade Iran to strictly limit its nuclear program, which many in the West believed was aimed at developing a nuclear weapon. Iran said the program was meant for peaceful uses.
Related: Did The Supreme Court Just Put The Nail In The Coffin For Utilities?
Tehran negotiated with the five permanent members of the United Nations Security Council – Britain, China, France, Russia and the United States – plus Germany and reached a deal on July 14 in Vienna. The sanctions were lifted on Jan. 16 once the U.N.’s nuclear watchdog, the International Atomic Energy Agency, confirmed that Tehran had met the terms of the deal.
After Friday’s meeting with Zamininia, Skourletis said the deal could begin Tehran’s return to the European oil market. Iran once sold up to 800,000 barrels of crude per day to refiners in Greece, Italy and Spain before the sanctions were imposed. At the time, Greece imported an average of 122,300 barrels of Iranian oil per day.
Related: Weak Global Economic Growth Linked To Oil Price Collapse
“[Iranian oil officials] are positively disposed towards Greece and think that Greece can be the European conduit for them to re-enter the market,” Skourletis told Reuters. “They said that the debt [settlement] can open the way so that our cooperation is boosted.”
He added that relations between Greece and Iran were close before the sanctions were imposed, and that Greek Prime Minister Alexis Tsipras plans to visit Iran early next month to help restore those cordial ties.
For months Iran has said it plans to increase its oil output to 500,000 barrels per day as soon as the sanctions were lifted, and that it plans to sell 200,000 barrels of oil to Europe each day. Still, several member nations of the EU aren’t reciprocating, for now at least, because of legal questions about how soon they can resume doing business with Iran even though the sanctions regime has ended.
By Andy Tully of Oilprice.com
More Top Reads From Oilprice.com:
Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com