Iran General NewsFACTBOX-Ties binding China and Iran

FACTBOX-Ties binding China and Iran

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Reuters: China has informally asked its energy companies to slow work on energy projects in Iran as its ties grow with the U.S. energy sector.

Oct 28 (Reuters) – China has informally asked its energy companies to slow work on energy projects in Iran as its ties grow with the U.S. energy sector.

Here are key facts about ties between China and Iran.

IRAN CHINA’S NO.3 OIL SUPPLIER

Iran is a major supplier of crude oil to China, the world’s second-biggest consumer of oil after the United States. Washington has urged China to use other suppliers.

China’s crude purchases from Iran rebounded to their second-highest on record in September at about 595,000 barrels per day, after a 31-percent fall in the first half of the year that traders attributed to prices, not politics.

Iran ranks after Saudi Arabia and Angola, according to Chinese customs data.

CHINA’S ENERGY, TRADE STAKES IN IRAN

Trade between China and Iran has grown quickly, dominated by Iran’s energy exports. In 2005, bilateral trade was worth $10.1 billion. In 2009, it was worth $21.2 billion.

In the first eight months of 2010, bilateral trade grew by 33 percent in value compared with the same time last year, reaching $18.1 billion, as China’s exports to Iran grew by 48.8 percent to close to 7 billion.

China’s main exports to Iran include machinery and equipment, motor vehicles, textiles and consumer goods.

Chinese firms have taken up development roles in some of Iran’s prize energy assets, such as the South Pars gas field and the Azadegan and Yadavaran oilfields.

China’s top energy group, CNPC, this year clinched a deal to develop phase 11 of Iran’s South Pars gas project and expand its operations in Iran.

CNPC is already in a deal to develop Iran’s North Azadegan oil field into a 120,000-barrel per day field at a cost of at least $2 billion. China’s Sinopec Group reached a $2 billion deal to develop Iran’s Yadavaran oil field in December 2007.

Despite U.S. efforts to squeeze Iran’s energy imports, China sells gasoline to Iran, which lacks refining capacity to meet domestic demand. Those shipments usually go through intermediaries and do not appear in Chinese customs statistics.

Iran and China have been talking about using the Chinese yuan to settle oil and investment transactions, as a way to shield them from Western financial pressure, sources told Reuters in July.

CHINA A DIPLOMATIC PARTNER

China has kept close bilateral ties with Iran, but also backed past U.N. Security Council resolutions criticising Tehran’s stance on nuclear issues.

Western powers criticised the disputed election of June 2009 that kept President Mahmoud Ahmadinejad in power and condemned subsequent violence and arrests directed at anti-government protests. China did not openly criticise the Iranian government.

CHINA WORRIED BY NUCLEAR PLANS, BUT WANTS TALK, NOT SANCTIONS

China’s support for Iran is not unreserved. Beijing wants to cast itself as a defender of nuclear non-proliferation and has voted for U.N. Security Council resolutions pressuring Iran over its disputed nuclear activities.

Western governments say Iran wants the means to make nuclear weapons. Iran denies this.

In June, Beijing backed the latest U.N. Security Council resolution, which imposed a fourth round of sanctions on Iran in as many years.

As one of the Council’s five permanent members, China holds the power to veto any resolutions. China also voted for previous U.N. resolutions against Iran. But it has repeatedly resisted proposals for sanctions that could harm its energy and economic ties with Iran, and shortly after the latest resolution Ahmadinejad praised ties with Beijing.

China has denounced the United States and European Union for imposing their own separate sanctions on Iran, and said Washington and Brussels should not take steps reaching beyond the U.N. resolutions.

Sources: Reuters; Chinese customs; U.S. Energy Information Administration www.eia.doe.gov; Chinese Ministry of Commerce www.mofcom.gov.cn; United Nations www.un.org/; John Garver, Flynt Leverett and Hillary Mann Leverett, “Moving (Slightly) Closer to Iran: China’s Shifting Calculus for Managing Its ‘Persian Gulf Dilemma”. (Editing by Simon Webb)

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