Mediterranean
refiners are gearing up to welcome the return of Iranian crude oil to
the market which could push prices lower and boost profits following the
easing of Western sanctions under a landmark nuclear deal.
Iran's
crude exports were a regular fixture for European refineries before
Western sanctions were imposed on the key OPEC producer in 2012 over its
nuclear program, halving its exports to just over 1 million barrels per
day.
"Iran has been a
long standing valued partner ... We are looking forward to Iran coming
back to the market," said a spokesman for Greece's biggest refiner
Hellenic Petroleum (
HEPr.AT), stressing that they will not buy any crude before sanctions are officially lifted.
"The
volumes of crude oil that will re-enter the Mediterranean market will
ease prices and give more options for refiners in the region," he added.
Though
there were no details on how sanctions on oil will be eased, Iranian
officials indicated they would try to maximize crude exports to Europe
and restore a market share of over 40 percent there.
Analysts expect the deal could see Iran increase its oil exports by up to 60 percent within a year.
Additional
volumes of crude would only pile pressure on a market already facing a
large oversupply. For refiners, however, cheaper feedstock means higher
profit.
Iranian
crude accounted for around one quarter of Hellenic's crude oil intake
before 2012, and just like many Mediterranean refiners, it is geared up
for Iranian crude.
European oil buyers, including Italy's Eni (
ENI.MI) and Saras (
SRS.MI)
have held talks with National Iranian Oil Company (NIOC) officials in
Europe and Tehran over the past year in anticipation of sanctions being
eased.
A spokeswoman for
Spain's Compania Espanola de Petroleos (CEPSA) said "Iranian crude has
largely been part of our supply and we maintained a long commercial
relationship with them."
"If
sanctions are lifted, as it seems, Iranian crudes will definitively be
again another alternative to consider," CEPSA told Reuters in a
statement.
A spokesman
for Saras said the independent refiner "would be delighted if Iranian
oil comes back to the market, as its quality is very interesting for
complex and flexible refineries like ours".
Asian buyers, notably China, India and Japan, have continued to buy limited volumes of Iranian crude in recent years.
"Two
to three months from now, you will probably see some Iranian crude
coming to Europe and Asia," said Eshan Ul-Haq, senior market consultant
with KBC, which expects Iran's export to rise over that period by
300-400,000 bpd, of which 150,000 bpd is expected to reach Europe.
"It would
mean cheaper crude for Mediterranean refineries, especially smaller
countries that have been impacted by economic problems – like Greece,"
Ul-Haq said.
Royal Dutch Shell (
RDSa.L),
whose officials recently held talks in Tehran on future cooperation and
the repayment of the Anglo-Dutch company's $2 billion debt said on
Tuesday it was interested in doing business in Iran.
"Strictly
within the boundaries of the law, we are interested in exploring the
role Shell can play in developing Iran's energy potential," a
spokeswoman said.
(Reuters)