Iran's Kharg Petrochemical Company has inked new term contracts with two buyers to supply up to a combined 480,000 mt of methanol annually, and has found ways to continue shipping cargoes to existing buyers despite the challenges presented by tightening sanctions, a company source said Wednesday.
The new contracts, which were signed around mid-February, give Kharg the option to sell between 120,000 mt and 240,000 mt of product to each of the two buyers over a one-year period, said the source, speaking on condition of anonymity.
One of the buyers is a Chinese company, said the source, but declined to give the nationality of the second buyer, which is outside Asia. The loading month for the first cargo for either buyer could not be determined.
Kharg had earlier tied up a term contract to supply between 120,000 mt and 240,000 mt of methanol, at seller's option, to a South Korean buyer for 2012.
The Iranian petrochemical maker also has a fourth term contract to supply between 90,000 mt and 180,000 mt of the product, at buyer's option, with a Japanese buyer.
Deliveries under both the contracts -- with the South Korean as well as the Japanese buyer -- are proceeding normally, though the new rounds of sanctions against Iran have presented problems, the source said.
Platts reported February 15 quoting another company source that one of Kharg's two term buyers of methanol had canceled its contract for 2012 while the other had halved volumes as a result of shipowners being unwilling to call at Iranian ports following EU and US sanctions.
The source also said at the time that the Japanese importer had slashed its contractual volumes for 2012 from 180,000 mt to 90,000 mt.
The second source, speaking to Platts Wednesday, said that although the sanctions have made it difficult for buyers to charter vessels to call at Iranian ports, the South Korean buyer had agreed to honor its contract and the term cargoes would load as per normal. Kharg loads its methanol cargoes from Kharg Island.
With regard to the Japanese contract, there is no cutback in volumes, the source stressed Wednesday. "The Japanese buyer will continue to load either 7,500 mt/month or 15,000 mt every other month," said the source. "We hope we can continue to supply ... we hope this situation will pass."
Apart from a 660,000 mt/year methanol plant, Kharg's petrochemical complex on Kharg Island is able to produce 115,000 mt/year of propane, 120,0000 mt/year of butane, 70,000 mt/year of naphtha and 170,000 mt/year of sulfur.
The tightening stranglehold of various international sanctions around Iran's financial and economic lifelines has made it difficult for countries and companies to pay Tehran for oil and other products they buy and to find vessels willing to ply to Iranian ports.
The US over the New Year imposed new measures that will make it increasingly difficult for Iran to sell its oil, with President Barack Obama on December 31 signing into law new sanctions targeting foreign firms dealing with Iran's central bank. The US measures, to be implemented following a warning period of several months, block foreign institutions in violation of the new sanctions from accessing the US financial system.
The European Union on January 23 agreed to tighten existing sanctions against Iran by banning imports of Iranian crude as well as targeting finance, petrochemicals and gold, in a bid to pressure the Islamic Republic.
Tehran insists its nuclear work is designed to master civilian applications of the technology, despite suspicions in the West that Israel's arch-foe is developing an atomic weapons program.
