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UPDATE 1-Europe oil buyers return to Tehran to talk business

Thu, 23rd Jan 2014 16:32

* Total, Saras among those to meet oil officials in Tehran * Iran hopes to reclaim European oil market by end of 2014 * Plans further meetings in Istanbul, London By Ron Bousso and Peg Mackey LONDON, Jan 23 (Reuters) - Major European oil buyers arequeuing up to meet Iranian officials as they jostle tore-establish a strong position with Tehran in anticipation of afull lifting of Western sanctions. Even as the United States and its Western allies try to holdthe line to maintain tough sanctions, executives from Europeanoil firms - among them France's Total and Italy'sindependent refiner Saras - have visited Tehran in recent weeks,industry sources say, for talks with the National Iranian Oil Co(NIOC). Tehran is confident that a thaw in relations with the Westhas opened a door to revive suspended oil trade with Europe asearly as the end of this year, sources directly involved in thetalks said. "Everybody is preparing for serious negotiations with Iran,pending the removal of sanctions," a senior Iranian oil officialtold Reuters. "We've already had lots of interest from ourtraditional customers in Europe." Western oil men are unanimous in viewing contact with Iranas preliminary and stress that they would do nothing in breachof the existing sanctions regime. "The best way for companies like us to go back to Iran isto follow strictly the sanctions and push both parties to reachan agreement which will lead to the lifting of sanctions oneday," Chief Executive Paolo Scaroni of Italy's Eni toldreporters in Davos on Thursday. An Eni spokesman said that officials from the company hadnot recently visited Tehran for talks on the eventual renewal ofcrude oil trade. In November, Iran and the West agreed to a six-month deal inwhich Tehran promised to scale back its nuclear programme inexchange for the suspension of some western economic sanctions. The sides began implementing the deal on Monday with hopesthat it will pave the way for a broad settlement of a decade-oldstandoff. The accord stopped short of ending the embargo onEuropean imports of Iranian oil. But that has not stopped Iranian and European oil executivesfrom starting to talk. "The Iranians are eager to export and they believe it mightbe possible by the end of this year, provided sanctions arelifted," said a senior Western oil executive, after returningfrom Tehran. A team from Italian refinery Saras travelled to Tehran inDecember at the invitation of NIOC, a source familiar with thematter said. A spokesman from Saras declined to comment and one fromTotal did likewise, adding that the company continued to respectthe embargo. "The Iranians are optimistic and think things can progressquickly," said an industry source, recently in Tehran. "But that is wishful thinking on their side... They areacting as if it is a matter of days or weeks before they canstart selling us crude again." Before the West tightened sanctions on Iran in mid-2012, theOPEC member supplied more than 700,000 barrels per day (bpd) -nearly a third of its overall sales - to the European Union plusTurkey. The remainder was bound for Asia. RE-CONNECTING Since then, Iran's oil exports - restricted to Asia andTurkey - have more than halved to just over one million bpd. On top of the overtures in Tehran, Iran also plans to holdmeetings with long-standing European customers in Istanbul,Turkey and London within the next several weeks. "I suspect it won't lead to anything real. They want to sendoptimistic signals and try to put prospective customers on thespot," an industry source who has been invited to Istanbul said. Iranian oil officials are also expected to make anappearance at the global oil industry gathering in London nextmonth, International Petroleum Week, after keeping a low profilesince sanctions started. Although a full lifting of sanctions is not expected in theshort term, Iran is preparing the ground for a return to theEuropean market. Buyers, on their part, expect competitivepricing when it does. The halting of Iranian crude imports together with reducedoutput from Iraq and Libya have weighed heavily on Europeanrefining profits. "The Iranians are testing the water: they're doing marketscouting, which is normal," said a senior European oilexecutive. "We still can't import a single drop of Iranian oil, but itdoesn't hurt to show a willingness to keep ties." The table below shows the Iranian crude oil imported bycompanies in Europe, including Turkey, prior to the 2012European oil embargo. Figures in '000s of bpd are based on industry and Reutersestimates. Customer Country Volume '11 Tupras Turkey 200 Total France 100 Shell UK/NL 100 Hellenic Greece 80 Cepsa Spain 70 Motor Oil Greece 60 Repsol Spain 30 ERG Italy 30 Iplom Italy 30 ENI Italy 20 Saras Italy 20 Total 740

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