As the trade war with the U.S. continues to escalate, China has re-engaged with Iran on three key projects and is weighing the use of what both Washington and Beijing term the 'nuclear option', a senior oil and gas industry source who works closely with Iran's Petroleum Ministry told OilPrice.com last week.
At the same time, Iran was desperate to increase the pace of development of the fields in its oil-rich West Karoun area, including North Azadegan, South Azadegan, North Yaran, South Yaran, and Yadavaran, in order to optimise oil flows ahead of further clampdowns on exports by the U.S. China which at that time was engaged in just the opening shots of the trade war with the U.S. was loathe to completely disregard all U.S. sensibilities when it came to Iran but equally saw itself as a longstanding partner of the Islamic Republic, not to mention always being cognisant of its need to ensure diversity of energy supply.
China said at the time, its ongoing activities on Yadavaran could be justified by dint of the fact that the original contract had been signed in good faith in 2007, way before the U.S. withdrawal from the nuclear deal in May 2018 and thus, legally speaking, it had every right to go ahead. The third of China's major as yet unfinished projects in Iran was the build-out of the Jask oil export terminal, which - crucially, particularly in the current security situation - does not lie within the Strait of Hormuz or even in the Persian Gulf, but rather in the Gulf Of Oman.
Only recently, Leonid Mikhelson, chief executive officer of Russian oil major, Novatek, said that future sales to China denominated in renminbi is under consideration and that U.S. sanctions accelerate the process of Russia trying to switch away from U.S. dollar-centric oil and gas trading and the damage from potential sanctions that go with it.
"The trade war between the U.S. and China will only accelerate the process," he added.
The trade war with the U.S. may be the very reason why this policy is not being pushed right now by China, Rory Green, Asia economist for TS Lombard told OilPrice.com last week.
"For China as well, the timing is not quite right, as its use of Eurodollar financing is currently significant, it has a lot of dollar-denominated bonds rolling over shortly, and its balance of payments needs a relatively healthy U.S. demand profile, but China wants to get away from the dollar system and that is the overall direction of travel," he concluded.
https://www.zerohedge.com/news/2019-08-14/china-prepares-its-nuclear-option-trade-war
At the same time, Iran was desperate to increase the pace of development of the fields in its oil-rich West Karoun area, including North Azadegan, South Azadegan, North Yaran, South Yaran, and Yadavaran, in order to optimise oil flows ahead of further clampdowns on exports by the U.S. China which at that time was engaged in just the opening shots of the trade war with the U.S. was loathe to completely disregard all U.S. sensibilities when it came to Iran but equally saw itself as a longstanding partner of the Islamic Republic, not to mention always being cognisant of its need to ensure diversity of energy supply.
China said at the time, its ongoing activities on Yadavaran could be justified by dint of the fact that the original contract had been signed in good faith in 2007, way before the U.S. withdrawal from the nuclear deal in May 2018 and thus, legally speaking, it had every right to go ahead. The third of China's major as yet unfinished projects in Iran was the build-out of the Jask oil export terminal, which - crucially, particularly in the current security situation - does not lie within the Strait of Hormuz or even in the Persian Gulf, but rather in the Gulf Of Oman.
Only recently, Leonid Mikhelson, chief executive officer of Russian oil major, Novatek, said that future sales to China denominated in renminbi is under consideration and that U.S. sanctions accelerate the process of Russia trying to switch away from U.S. dollar-centric oil and gas trading and the damage from potential sanctions that go with it.
"The trade war between the U.S. and China will only accelerate the process," he added.
The trade war with the U.S. may be the very reason why this policy is not being pushed right now by China, Rory Green, Asia economist for TS Lombard told OilPrice.com last week.
"For China as well, the timing is not quite right, as its use of Eurodollar financing is currently significant, it has a lot of dollar-denominated bonds rolling over shortly, and its balance of payments needs a relatively healthy U.S. demand profile, but China wants to get away from the dollar system and that is the overall direction of travel," he concluded.
https://www.zerohedge.com/news/2019-08-14/china-prepares-its-nuclear-option-trade-war
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