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Iran Seeks More Euro for Crude Exports to S. Korea

Oct 23, 2017, 1:29 PM
News ID: 20932

EghtesadOnline: Unenthusiastic about trading oil in the US dollar and South Korea's won, Iran wants more euro payments for the crude oil it sells to South Korea, Oil Minister Bijan Namdar Zanganeh said, signaling that Tehran supports a growing interest in moving away from dollar as the international currency in oil market.

South Korea, traditionally a major customer of Iranian crude, splits its payments in euro and won, but Iran looks to increase the euro payments, Zanganeh said on the sidelines of a meeting with Kim Hyun-mi, South Korea's minister of land, infrastructure and transport, in Tehran on Tuesday, IRNA reported.

"We look forward to seeing more euro payments by South Korea in exchange for our crude oil. Of course, we pay for some of our imports from South Korea in won," Financial Tribune quoted him as saying.

"We may have to change our oil trade policy [with South Korea] if payment issues are not addressed."

Following last year's lifting of international sanctions, Tehran told its customers to pay for unpaid oil dues in euro and said it was ditching dollar for future shipments. The statement comes on the heels of reports that China is looking to convince Saudi Arabia to trade oil in yuan.

However, the payment mechanism is unlikely to change the course of Iran's South Korea-bound shipments, as exports to the fourth-largest economy continues to be strong after international sanctions were lifted against Tehran last year.

South Korea shipped in 1.83 million tons of crude oil from Iran in September, or 446,148 barrels per day, the highest level in six months, data by Reuters show. The country mainly imports Iranian condensate, an ultra-light oil used to produce more expensive fuels like naphtha.

In recent years, several nations opposed to the dollar being the world's reserve currency have progressively sought to abandon it. For instance, Russia and China seek to operate in a non-dollar environment when trading oil. Both countries have also increased their efforts to mine and acquire physical gold if, or perhaps when, the dollar collapses, according to a report by CNBC.

--- US Firms Welcome

Zanganeh also pointed to Washington's hawkish stance on Tehran and criticized what he described as US President Donald Trump's efforts to undercut the nuclear deal and sabotage Iran's economic relations with the West.

"Why is Mr. Trump upset about Europeans making money from doing business with Iran? Why has he held back American companies?" Zanganeh said.

Under the US law, American companies are prohibited from undertaking business with Iran.

"American firms are welcome to come to Iran and make profit … We have no restrictions in negotiating and collaborating with American companies to develop our oil and gas resources. We are ready to sit at the negotiating table tomorrow," Zanganeh said.

Europe's biggest oil and gas companies, such as Total, Royal Dutch Shell, Eni and BP, are actively seeking a place in Iran's energy market, with the French energy major having already signed a $5 billion deal for an offshore gas project.

However, US companies have been shut out of the Iranian market for decades, despite running major oil and gas fields in Iran's neighbors.