Publishe Date: 9:48 PM - 11/5/2013 | Print

China Set to Pay Back Blocked Oil Payments to Iran

Economy - Chinese have struck an agreement with Iranian Parliament Speaker Ali Larijani in a last week meeting to settle their debts and start releasing the USD22 billion oil payment blocked in an Iranian bank account in Beijing under the US oil embargos against Iran, a source present at the meeting disclosed.

During the parliament speaker's recent visit to China, the possible ways to pay back Iran's oil revenues from China went under study and the two sides' eventually came into terms to have the Chinese send capital equipment to Iran for development projects," member of the parliament's Planning, Budgeting and Auditing Commission Ali Mohammad Ahmadi, who accompanied Larijani during the recent visit to China, said.

"To do so, a number of 40 joint development projects were defined for Chinese investment in Iran," he added.

"On the basis of the same plan", the lawmaker said, "the Chinese will make investments in Iran's petrochemical, cement, steel, underground, water and waste water projects through a Chinese company which is already a trade partner to Iran."

According to the legislator, joint finance projects present one of the possible ways for the repayment of Iran's oil incomes by Asian buyers.

At the beginning of 2012, the United States and the European Union imposed new sanctions on Iran's oil and financial sectors to prevent other countries from purchasing Iranian oil and conducting transactions with the Central Bank of Iran. The sanctions came into force in early summer 2012.

Sanctions imposed by the United States have blocked US dollar-denominated transactions with Iran. One of the measures Iran has been taking to work around such embargos is having payments for oil it exports to China deposited in yuan renminbi in Chinese accounts, and then using the funds to purchase permitted goods, such as food and consumer products, from Chinese companies.

The latest OPEC monthly market report said that China has recently overtook the US as the world’s largest net oil importer. The report estimates that China has imported 16.01 million tons of Iranian oil during the first nine months of 2013—428,160 barrels per day. This is a 17.54 percent increase in Iranian oil imports by China over the same period last year.

 

Tags: oil -
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