EU firms renew Iran oil deals to win sanction reprieve
By Ikuko Kurahone and Dmitry Zhdannikov
LONDON (Reuters) - Italian, Spanish and Greek companies have extended most of their oil supply deals with Iran for 2012, meaning the lion's share of Iran's supplies to the European Union would likely be exempted from sanctions for at least the first half of the year.
Trading sources told Reuters that Italy's Saras (SRS.MI: Quote), ERG (ERG.MI: Quote) and Iplom, Greece's Hellenic (HEPr.AT: Quote) as well as Spain's Repsol (REP.MC: Quote) have either extended or have not scrapped existing term supply contacts with Iran for 2012.
"We kept our 2-year deal with Iran," said a trader with a refiner.
"At the moment it is business as usual, but of course we are considering potential alternatives. Asking the Saudis for more crude is one possibility," said a trader with an Italian company.
Italy, Spain and Greece take some 500,000 barrels per day out of European Union's imports of Iranian oil of around 600,000 bpd, according to the latest available data.
Diplomatic sources told Reuters the three countries, the EU's most fragile economies, were pushing for a grace period for up to 12 months as an immediate switch to oil from other producers may prove too costly and painful for them.
Some diplomats said that when EU foreign ministers meet on January 23 to decide on sanctions, they will most likely agree on a compromise of six months for the grace period, and no longer.
Only existing deals would be granted that period while new or spot deals would not be exempted from sanctions. Continued...