US sanctions on Iran may boost Chinese economy

In the wake of new US sanctions, some EU-based buyers of OPEC’s third-largest oil producer said they would seek US waivers to purchase Iranian crude. “Our main customers are in Asia … but we expect to preserve and save this level of exports to Europe and Africa,” Iranian Oil Minister Bijan Zanganeh said.

EU investment in Iran, mainly from Germany, France and Italy, has jumped to more than 20 billion euros since 2016, in projects ranging from aerospace to energy.

But some foreign firms have already started signaling their intent to pull back from Iran.

The French energy company Total said on Wednesday it will pull out of a multibillion-dollar gas project in Iran if it cannot secure a waiver from US sanctions. Iran had hailed the contract as a symbol of the accord’s success.

Iranian Oil Minister Zanganeh said:

If Total does not receive US waivers, they will quit and will be replaced by a Chinese company

French gas and power group Engie, Polish gas firm PGNiG and German lender DZ Bank were the latest companies on Friday to say that their business dealings with Iran would be affected by new US sanctions.

Zanganeh said other countries such as Russia and China were keen to fill the vacuum left by the potential exit of European investors.

“The Chinese are very eager. Two big companies SINOPEC and CNPC are our historical partners for Iran. In the biggest fields in Iran they are eager to be involved,” Zanganeh said.

Read: Iran says oil export drop not expected if EU saves nuclear deal

EU’s sanction-blocking measures

EU energy chief Arias Canete, who is in Tehran for a two-day trip, presented Iranian counterparts with an array of potential measures drafted by the EU this week to mitigate the impact of US sanctions in a bid to bolster moderates around President Hassan Rouhani, who want to keep trade open with the West.

“We want to solve all the problems that are impeding normal trade in oil,” Arias Canete said.

Zanganeh said Iran was particularly keen for the EU to act on a proposal urging EU governments make direct euro-denominated payments for oil exports to Iran’s central bank, bypassing the US financial system.

Other measures included renewing a sanctions-blocking measure to protect European businesses in Iran and allowing the European Investment Bank to do business in Iran.