Hengli Petrochemical, the privately-owned Chinese refiner that was sanctioned by the U.S. in April over allegedly buying Iranian oil, is looking to buy crude from other Middle Eastern producers and West Africa, Reuters reported on Thursday, citing trade sources.
Hengli Petrochemical, one of China’s largest independent refiners which operates a refinery in Dalian with the capacity to process 400,000 barrels per day of crude, was sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) at the end of April.
“China-based independent teapot refineries continue to play a vital role in sustaining Iran’s oil economy, and Hengli is one of Iran’s largest customers for crude oil and other petroleum products, having purchased billions of dollars’ worth of Iranian petroleum,” the U.S. Treasury said back in April.
At the time, Hengli Petrochemical said it had enough oil in stock for three months of consumption and its supply network had not been affected by the latest U.S. sanctions. The company also said the sanctions had no factual or legal basis and it would seek to have them removed.
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Private Chinese refiners, the so-called teapots, have been the biggest buyers of Iranian crude for years. Hengli Petrochemical, however, denies having bought Iranian crude and has been seeking to be removed from the U.S. blacklist of Iranian oil buyers.
Hengli has now asked about potentially buying crude cargoes from West Africa or non-Iranian producers in the Middle East, according to multiple sources who spoke to Reuters.
The refiner has reportedly acquired at least 2 million crude from West Africa for delivery in late June-early June, some of the sources told the publication.
Yet, Hengli could find itself in a Catch-22 situation in procuring non-sanctioned crude to prove that it’s not buying Iranian oil, as sellers may not be too willing to expose themselves to potential secondary sanctions by transacting with an entity sanctioned by the U.S.
By Charles Kennedy for Oilprice.com
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