Source: Press TV
The world's largest independent oil trader Vitol has signed a deal to provide Iran with a major loan worth $1 billion - a landmark move that can help expedite the country's crucial plans to boost its production of crude oil.
Reuters in a report quoted several informed sources as confirming that the
pre-finance deal had been sealed between Vitol and the National Iranian Oil
Company (NIOC) last October and would come into effect this month. The loan
would be in euros and would be guaranteed by future exports of refined products
It was the first such major contract signed between Iran and a privately held trading house since sanctions were lifted in early 2016 and could help re-establish old dealings with Western firms.
The pre-finance nature of the deal is becoming increasingly common among commodity traders, as it provides them with long-term access to substantial amounts of oil and fuels, and their partners benefit from the upfront cash, according to a report by OilPrice.com.
"It is in euro...with the interest rate of around 8 percent in exchange for oil products," a source with a close knowledge of the deal told Reuters, adding that some products could be supplied by the private sector rather than NIOC.
Major crude producers in the Middle East, including Iran, remain reluctant to sell crude oil to traders as they prefer to control pricing and destination themselves.
Traders have also been looking at restarting the Caspian crude and product swaps with Iran but the process has been slow to pick up.
Iran exports more than 500,000 barrels per day (bpd) of refined products, mainly fuel oil, petroleum gas and naphtha to Asian markets, Reuters further added quoting OPEC estimates.
Last year, the Swiss-based Vitol sealed another pre-finance deal, this time with Kuwait Energy, which will see the world's top commodity trader provide the Kuwaiti company with $100 million in exchange of crude oil, to be drawn from Kuwait Energy's operations in Iraq, according to a report by OilPrice.com. Most of the money that Vitol will provide will be spent on expanding those same Iraqi operations. The remainder will go towards developing Kuwait Energy's Egyptian business, added the report.
Vito was one of the first to resume purchasing crude oil and oil products from Iran after the removal of sanctions against the country.
"We've bought some, yes we have," Vitol CEO Ian Taylor told Bloomberg last February. "We've bought a bit of everything really. Bit of products, bit of condensate. It's very much business as normal."
Last May, Vitol's rival Glencore also announced that it was discussing a long-term deal with Iran to purchase crude oil from the country.
... Payvand News - 01/05/17 ... --