TEHRAN, Feb 20, (Agencies): Iran deployed warplanes and missiles Monday in an “exercise” to protect nuclear sites threatened by possible Israeli attacks and warned it could cut oil exports to more EU nations unless sanctions were lifted.
The stance marked a hardening of the Islamic republic’s defiance in an international standoff over its nuclear programme — and suggested it was readying for any eventual confrontation.
The moves were announced the same day as officials from the UN nuclear watchdog agency arrived in Tehran for a second round of talks they said were focused on “the possible military dimensions of Iran’s nuclear programme.”
Iran, while holding out hope of reviving collapsed negotiations with world powers, has underlined it will not give up its nuclear ambitions, which it insists are purely peaceful.
Much of the West and Israel, though, fear Iran’s activities include research for atomic weapons.
The United States and Europe have ramped up economic sanctions against Iran’s vital oil sector, while Israel has fuelled speculation it could be on the brink of carrying out air strikes on Iranian nuclear facilities.
Iran’s military said in a statement on Monday that it has launched four days of manoeuvres in the south of the country aimed at boosting anti-air defences to protect nuclear sites.
Missiles, anti-aircraft artillery, radars and warplanes were being deployed in the exercise it dubbed “Sarollah”, a word borrowed from the Arabic meaning “God’s vengeance”.
“These manoeuvres aim to reinforce the coordination between the military and the Revolutionary Guards for a total coverage of the country’s sensitive facilities, especially nuclear sites,” the statement said.
At the same time, the deputy oil minister, who also runs the National Iranian Oil Company, warned that a cut in Iranian oil exports announced on Sunday against France and Britain could be expanded to other EU nations.
“Certainly if the hostile actions of some European countries continue, the export of oil to these countries will be cut,” said Ahmad Qalebani, pointing the finger at Spain, Greece, Italy, Portugal, Germany and the Netherlands, according to a Mehr news agency report.
Iran exports about 20 percent of its crude — some 600,000 barrels per day (bpd) — to the European Union, most of which goes to Italy, Spain and Greece.
Although the export halt for France and Britain was largely symbolic — neither country imports much Iranian oil — prices on world markets soared on fears the cuts could be expanded before Europe secured other supplies.
Brent North Sea crude for delivery in April was trading at $120.55 a barrel on Monday, after hitting a nine-month high before inching back a little. New York’s main contract, West Texas Intermediate light sweet crude for March, moved up to $104.85.
Iran’s defiance included another pointed military deployment: that of two Iranian warships that state television said had docked in Syria to help train that allied country’s sailors.
Their presence in the Mediterranean, close to Israel, unnerved the Jewish state, which said it “will closely follow the movement of the two ships to confirm that they do not approach the Israeli coast.”
Iran has also flaunted what it said was “major” nuclear progress, declaring it was adding thousands more centrifuges to its uranium enrichment activities and producing what it said was 20-percent enriched nuclear fuel.
Embargo
Tehran is considering extending an oil embargo on France and Britain to other European countries, a semiofficial Iranian news agency reported Monday.
The head of Iran’s state oil company Ahmad Qalehbani was quoted by Mehr as saying that the country would stop selling crude to nations who take action against Tehran.
“If the hostile acts of some other European countries continue, oil exports to these countries will be cut,” he said.
Iran announced the cut-offs to France and Britain on Sunday, a pre-emptive retaliation for an EU embargo over Tehran’s controversial nuclear program that is scheduled to go into effect in July.
Since the embargo was announced last month, Iranian officials have said that Tehran should enact its own sanctions immediately, before European countries lined up alternative suppliers.
The news sent oil prices to a nine-month high, reaching $105 per barrel in Asia on Monday.
Qalehbani predicted the prices could rise even higher. “The current situation of the market shows that there is a probability of oil price passing $150 per barrel,” he said.
Iran says Spain, the Netherlands, Greece, Germany, Italy and Portugal are among its European customers.
Some of these countries may no longer be importing Iranian oil. France has played down the impact of Tehran’s action, saying French oil companies already have stopped purchases of Iranian crude.
Qalehbani said demand for Iran’s oil has increased in recent weeks, saying that Iran seeks “unconditional” contracts. He did not elaborate, but the Iranian media has previously mooted the idea of having buyers sign long-term contracts before they are allowed to purchase any oil at all.
China rebuked Iran on Monday for stopping oil sales to British and French companies at the weekend, calling for renewed efforts at dialogue over an escalating stand-off over Tehran’s controversial nuclear programme.
China has repeatedly called for talks over Tehran’s efforts to enrich its own uranium, which Western countries suspect is aimed at obtaining nuclear weapons. Iran has said the enrichment is for power generation.
“We have consistently upheld dialogue and negotiation as the way to resolve disputes between countries, and do not approve of exerting pressure or using confrontation to resolve issues,” Chinese Foreign Ministry spokesman Hong Lei said when asked about Iran’s ban on oil sales to British and French firms.
China “hopes all sides can get back onto the correct path of dialogue as soon as possible,” Hong told a daily news briefing.
China is one of the largest users of Iranian oil, buying around 20 percent of total exports.
The European Union on Monday shrugged off Tehran’s threat to cut oil to “hostile” EU nations, saying the bloc was capable of coping with any halt in Iranian supplies.
“In terms of immediate security of stocks, the EU is well stocked with oil and petroleum products to face a potential disruption of supplies,” said Sebastien Brabant, a spokesman for EU policy chief Catherine Ashton.
In Rome, French Foreign Minister Alain Juppe said Tehran’s move “makes one smile” and that it is “very imaginative” in provocating others.
“Undoubtedly, Iran is very imaginative with regards to provocation. It is not Iran that decided to cut off its deliveries, we are the ones who decided to terminate our orders,” Juppe told a press conference in Rome.
“It makes one smile,” he added.
Iran, which on Monday said it planned to halt oil sales to several more European Union states in addition to Britain and France, sends only around a fifth of its exports to the EU, with Asian countries taking the lion’s share, according to US and international oil agencies.
The Energy Information Administration (EIA) in Washington says that in 2010 four Asian states took around two-thirds of all the crude oil exported by the Islamic Republic, with China buying 20 percent, Japan 17 percent, India 16 percent and South Korea 9 percent.
A separate body, the International Energy Agency (IEA), reports that Iran supplies between 6 and 10 percent oil consumption in the four Asian nations.
Japan’s top buyer of Iranian crude, Showa Shell Sekiyu KK, is not expected to suffer any impact from Iran’s halt of oil sales to French and British companies, the firm, an affiliate of Royal Dutch Shell, said on Monday.
A spokesman for Showa Shell said the firm and Shell were separate companies and he had not heard about any impact to its imports.
US sanctions on Iran over its nuclear programme look set to make it difficult for refiners in Japan, Iran’s No.3 crude buyer, to pay Tehran for its oil. Japan is seeking an exemption from US sanctions, which, if enforced, would penalise some Japanese banks for transactions with Iran’s central bank.
Showa Shell, which buys about 100,000 barrels of Iranian crude oil each day, is awaiting the Japanese government’s instructions on whether to cut its Iranian crude imports.
Industry sources say the company has yet to renew its Iranian contract that expires at the end of March.
An industry source said Showa Shell and the parent firm have different contracts with Iran. Showa Shell is 35 percent owned by Shell, with about 15 percent held by Saudi Arabia’s state oil giant, Saudi Aramco.
Taiwan cut its imports of Iranian crude by nearly half in 2011 from the previous year ahead of tougher sanctions by the West and on lower refinery throughput, government data showed on Monday.
Crude buyers globally are being pressured by the West to reduce Iranian imports, with the United States and the European Union imposing new economic sanctions targeted at reducing Tehran’s oil revenue over its controversial nuclear programme.
Taiwan’s crude imports from Iran totaled 30,247 barrels per day (bpd) in 2011, down 49 percent from 58,756 bpd in 2010, data from the country’s Bureau of Energy showed.
During the period, the country’s overall crude imports fell about 9.3 percent to 794,938 bpd while its refinery throughput was down 7.7 percent to 808,707 bpd after Formosa Petrochemical Corp had to shut its entire complex following a series of fires.
Formosa has also cut back imports of high-sulphur crude from the Middle East in 2011 as one of its desulphurisers was down and it replaced part of the demand with low-sulphur Angolan oil.
In 2011, Angola rose to become the third-largest supplier to Taiwan as imports increased 70.7 percent on year to 142,926 bpd. Taiwan’s imports from top supplier Saudi Arabia fell 10 percent on year to 260,778 bpd in 2011.
Iran has reached an agreement with China’s state oil traders for 2012 crude oil supply contracts, with shipments supplied to Unipec to be reduced from 2011, while volumes to Zhuhai Zhenrong Corp will remain unchanged from a year ago, trade sources said on Monday.
China and Iran have stumbled on a 2012 supply deal as two sides haggled over prices and credit terms, prompting Sinopec Corp to slash imports since January by around 285,000 barrels per day (bpd), or just over half of the total daily amount it imported in 2011.
The agreement will pave the way for China, the largest buyer of Iranian crude, to resume oil shipments and would provide a lifeline to Tehran, which is battling the harshest sanctions from the US and an oil embargo from the 27-member European Union.
Oil is a pillar part of Iran’s export revenues and an important lifeline for its increasingly isolated economy. Tehran has little refining capacity and must import about 40 percent of its gasoline needs for domestic consumption.
“Zhenrong volumes will be the same but there will be some cuts to the Unipec side,” said a trading source with direct knowledge of the deals.
He declined to give more details on the reduction.
The European Union could cope with an abrupt halt by Iran of its oil exports to the region as buyers of Iranian oil are already adjusting to the EU’s forthcoming ban on Iranian shipments, an International Energy Agency official said on Monday.
Oil prices rose on Monday to an eight-month high above $121 a barrel as Iran said it halted exports to British and French companies ahead of a European Union embargo starting on July 1.
“We don’t think this announcement will have a real impact on the market because France and the UK have already stopped buying crude from Iran,” said Didier Houssin, director of energy markets and security of the International Energy Agency.
Talks
UN nuclear watchdog officials arrived in Tehran on Monday for discreet talks on Iran’s suspect atomic activities, amid a worsening international showdown that has sent tensions and oil prices soaring.
The International Atomic Energy Agency (IAEA) is hoping for “concrete results” from the two days of talks focused on “the possible military dimensions of Iran’s nuclear programme,” the delegation’s leader, chief UN nuclear inspector Herman Nackaerts, said on departing from Vienna late Sunday.
But he cautioned progress “may take a while.” The last such visit, three weeks ago, yielded no breakthrough.
Iran has taken an increasingly defiant stance against Western sanctions and Israeli threats of military action against it.
On Sunday, its oil ministry announced crude exports to France and Britain had been halted, apparently in retaliation for an EU ban on Iranian oil that is being phased in during the next five months.
Although Iran provides less than three percent of France’s oil imports and almost none of Britain’s, oil traders took fright at the prospect of Iran expanding its measure to the rest of Europe, which buys 20 percent of its crude.
Brent North Sea crude for April delivery soared to an eight-month high, up $1.52 to $121.10 in Asian trade. New York’s main contract, West Texas Intermediate light sweet crude for March delivery, jumped $1.72 to $104.96 per barrel.
The Islamic republic has also in recent days flaunted what it said was “major” nuclear progress, declaring it was adding thousands more centrifuges to its uranium enrichment activities and producing what it said was 20-percent enriched nuclear fuel.
The IAEA, which in November issued a report voicing strong suspicions that Iran was researching an atomic weapon and missile warheads, confirmed last month that a new, fortified uranium enrichment plant outside Iran’s holy city of Qom had been activated.
The West has ratcheted up its sanctions to try to force Iran to stop enrichment, but with no success so far.
Israel, which believes its existence is threatened by a nuclear Iran, has stepped up its warnings that it could launch air strikes, prompting the United States and Britain to urge restraint.
Recent assassinations of three Iranian nuclear scientists, and attempted bomb plots against Israeli diplomats in several countries pointed to a possible covert war between the two Middle East arch foes.
But Iran, after hesitating for nearly four months, has also formally agreed to an EU overture to revive talks with world powers that collapsed a year ago.
The head of Iran’s Atomic Energy Organisation, Fereydoon Abbasi Davani, told Al-Alam television that the powers — the so-called P5+1 group consisting of the five permanent UN Security Council members plus Germany — should let up with the pressure.
“They would do better to change their method, because what they’ve used in the past hasn’t met with success,” he said.
“We are going to pursue our (nuclear) path,” which is purely for peaceful ends, he said.
Abbasi Davani added that previous talks on providing Iran with nuclear fuel were now invalid, “because we produce our own fuel — now when we sit down at the table, it’ll be us who will ask them (the P5+1) if they want fuel.”
He also taunted Israel, which he said was “afraid of the progress we’ve made in the nuclear field.”
Hormuz
Iraq could lose more than half of its oil-exporting capability if neighbouring Iran shuts the vital Strait of Hormuz shipping lane, Iraq’s planning minister said on Monday, adding no immediate alternatives would make up the shortfall.
Of the average 2.165 million barrels of oil per day that Iraq exported last year, about 1.7 million bpd went through Basra export terminals to the Gulf via Hormuz.
“What worries us is the closure of the Strait of Hormuz because it means Iraq will lose more than half of its oil exporting capabilities,” Ali al-Shukri told Reuters in an interview.
“Today we are trying to look for alternatives to export Iraqi oil,” said Shukri, whose OPEC member country is home to the world’s fourth largest oil reserves.
Iran is embroiled in a long-running dispute with the West over its nuclear programme and has repeatedly threatened it could close Hormuz if sanctions succeed in preventing it from exporting crude, a move Washington says it will not tolerate.
The European Union last month enraged Tehran, the world’s fifth largest oil exporter, when it decided to impose a boycott on its oil from July 1.
The sanctions are a delicate issue for Baghdad, which has strong political ties with Iran and Syria, where President Bashar al-Assad is also facing international sanctions for violence in unrest against his rule.
Shukri said Iraq could rely on exporting more crude by trucks and could increase the export capacity of its northern pipeline which transfers oil from the northern oilfields to the Turkish Mediterranean port of Ceyhan to 1 million bpd from a current 400,000 bpd.
But, he said: “These two hasty solutions which we could depend on will not meet our exporting abilities.”
The Kirkuk-Ceyhan pipeline has come under sabotage attacks many times since the 2003 US-led invasion, and frequently breaks down due to technical faults that require years to fix.
Last year, Iraqi and Jordanian officials said the two countries had agreed in principle to build a pipeline to supply Jordan with crude oil in the coming decades.
Currently, Iraq transports about 15,000 bpd of crude exports in trucks to neighbour Jordan.
Shukri said longer-term plans that could be considered would be to invite foreign companies to rehabilitate an oil pipeline between Iraq and Banias in Syria that has been idle for about three decades.
But unrest in Syria makes it unlikely there will be any immediate interest in reviving that pipeline. Assad is under increasing pressure over his government’s crackdown on protests that some countries fear could slide into civil war.