Thursday, December 13, 2018

Iran falls to 6th biggest oil supplier to India in November, from 4th in October

A worker walks atop a tanker wagon to check the freight level at an oil terminal on the outskirts of Kolkata in this November 27, 2013 file photo. REUTERS/Rupak De Chowdhuri/Files 


NEW DELHI (Reuters) - India's monthly oil imports from Iran plunged to their lowest in a year in November with Tehran dropping two places to become only the sixth biggest supplier after New Delhi cut purchases due to the impact of U.S. sanctions, according to ship tracking data and industry sources.

Last month, the United States introduced tough sanctions aimed at crippling Iran's oil revenue-dependent economy. Washington did, though, give a six-month waiver from sanctions to eight nations, including India, and allowed them to import some Iranian oil.

India is restricted to buying 1.25 million tonnes per month, or about 300,000 barrels per day (bpd).

In November, India imported about 276,000 bpd of Iranian oil, a decline of about 41 percent from October and about 4 percent more than the year-ago month, ship tracking data obtained from shipping and trade sources showed.

After abandoning the 2015 Iran nuclear deal, U.S. President Donald Trump is trying to force Tehran to quash not only its nuclear ambitions and its ballistic missile programme but its support for militant proxies in Syria, Yemen, Lebanon and other parts of the Middle East.

India's imports from Iran in November, included some parcels that were loaded in October. In November, Iraq and Saudi Arabia continued to be the top two oil sellers to India. 

The UAE, which was the sixth biggest oil seller to India in October, became the third top seller to India in November, knocking down Venezuela by a notch to fourth position. 

Nigeria continued at No. 5 position, while Iran slipped to sixth place. 

"Iran do not have vessels to export oil on time ... some November loading vessels will arrive in December," said an industry source, with knowledge of the matter.

Local and international shippers are not carrying Iranian cargoes despite India winning a waiver, this source said. The key problem is that while India can import Iranian oil without falling foul of Washington, that may not apply to a shipping company signing a new delivery contract.

Instead, India is relying on Iranian tankers for crude imports and Iran is using many of its vessels for crude storage.

The sources declined to be identified citing the confidentiality of the numbers.

Indian refiners, wary of the impact of U.S. sanctions, had boosted imports from Iran ahead of their introduction, with imports averaging about 563,000 bpd in April-November, a growth of about 32 percent from a low base in the previous fiscal year, the data showed.

In the previous financial year to March 2018 India had cut oil imports from Iran due to a dispute over development rights of a giant gas field. 

Iran was hoping to sell more than 500,000 bpd of oil to India in 2018/19, its oil minister Bijan Zanganeh said in February, and had offered almost free shipping and an extended credit period to boost sales to India.

Government sources say Reuters' calculations showing India's oil imports from Iran in this fiscal year would be higher than the 452,000 bpd, or 22.6 million tonnes, it imported in the previous year, are correct.

During January-November this year India's oil imports from Iran rose by an annual 18.4 percent to 552,000 bpd, the data showed. 

(Reporting by Nidhi Verma; Edited by Martin Howell and David Evans)

Wednesday, December 12, 2018

China's flawed futures contract pushes oil trade to record high in 2018



Shanghai’s new yuan-denominated derivatives contract is set to propel global crude oil futures trading volumes to a record high in 2018, eating into the market share of the two most active crude contracts, Brent and WTI. 

Launched in late March by Shanghai International Energy Exchange (INE), China’s first serious attempt to establish an Asian oil price benchmark has seen strong take-up, grabbing a spot market share of around 6 percent versus international Brent LCOc1 and U.S. West Texas Intermediate (WTI) CLc1, taken equally from both benchmarks. 

Spot crude oil volumes have more than doubled globally over the past five years, but exchange data shows Brent and WTI activity will dip this year for the first time since 2013. 

Brent and WTI volumes slipped to 207.2 million lots of 1,000 barrels each for this year by Dec. 10, down from 220.17 million lots in 2017. 

However, adding 13 million lots of Shanghai crude oil futures ISCc1 to those of Brent and WTI, and last year’s levels have been reached with around two weeks of trading left this year. 

“If a new exchange achieves 6 percent market share vs the two incumbents within the first year of trading that’s fairly impressive,” said John Driscoll, director of Singapore-based consultancy JTD Energy. 

Shanghai crude’s first year will have been better than Brent’s, which took 3.1 percent share from dominant WTI in its 1988 launch-year. 

(GRAPHIC: Shanghai crude oil futures vs Brent & WTI - tmsnrt.rs/2Pu8WeJ)

FLAWED CONTRACT

Despite the successful launch, Shanghai crude futures are fraught with problems preventing them from becoming an efficient hedging tool for oil producers and, ultimately, a benchmark on par with Brent or WTI. 

One of the main issues is a lack of international market participants. 

Matt Stanley, a fuel broker with Starfuels in Dubai, said most participants in Shanghai crude futures were Chinese individuals who don’t trade on market fundamentals. 

“It really has no bearing on the two main benchmarks (Brent and WTI) as it is a Chinese market for the Chinese, not a Chinese market for a global trading audience,” he said. 

Traders said to become more successful, the market needed a more diverse group of participants, including producers, end-users and international shippers to offset the dominance of the Chinese traders. 

“Chinese retail traders follow patterns that we in the oil industry don’t, while China’s oil majors also have very differing interests to us. Add intermittent trading, and this exposes us to the risk of being stuck with positions we don’t want to carry,” said one trader with an international oil major. 

He declined to be named as his company was still in talks on joining Shanghai crude futures. 

Other issues include incompatible trading hours with the rest of the world, including two short sessions between 0100 and 0700 GMT and a night session, and limited physical deliverability of its underlying crude grades in China.

CHOPPY TRADING

Inconsistent trading volumes make it difficult to use Shanghai crude as a financial hedge. 

“For industrial investors, they would need smooth trading of front-month to hedge risks,” said Chen Kai, head of research with Chinese brokerage Shengda Futures. 

Stock selloff snowballs on fresh fears for world growth
 
After a roaring start between March and August, front-month Shanghai crude futures virtually stopped trading until November, after which activity picked up again. 

Chen Kai said this behaviour by retail traders was common in China, with similar patterns seen in asphalt and metals futures. 

INE declined to comment for this article. 

To create more liquidity, the exchange is trying to attract so-called market makers, usually major oil producers, merchants or banks, often deployed by international exchanges such as CME Group (CME.O) and Intercontinental Exchange (ICE.N) to generate activity in contracts by providing constant bids and offers on the platform that counterparties can engage with. 

Jiang Yan, chairman of INE’s parent, the Shanghai Futures Exchange, said earlier this month in Shenzhen “gradual improvement of relevant domestic laws and regulations” would in time “greatly enhance” Shanghai crude’s recognition with international investors. 

Outside China, the contract’s denomination in yuan as part of Beijing’s drive to push its currency into global markets has also scared off some traders as it introduces foreign exchange risk to the market. 

To attract international participants, Stanley said a global exchange could “have a look-a-like contract in U.S. dollars, thereby eliminating any FX risk.” 

Stanley pointed to iron ore futures, where Singapore Exchange (SGX) SGX1.SG mirrors a yuan-denominated contract from the Dalian Exchange in U.S. dollars. 

Even without its flaws, some doubt whether Shanghai crude can break the dominance of Brent and WTI. 

“Liquidity is very hard to displace,” said Martijn Rats, Global Oil Strategist at U.S. bank Morgan Stanley, adding that any new product would need some big advantages to sap liquidity from the most active futures contracts. 

JTD’s Driscoll said the jury is still out but added: “It’s likely things will gradually move, mature and develop.” 

Reporting by Henning Gloystein in SINGAPORE; additional reporting by Meng Meng in BEIJING and Florence Tan and Roslan Khasawneh in SINGAPORE; Editing by Sonali Paul

Monday, December 10, 2018

US Leads New-Build Capex Globally Across Oil and Gas Value Chain, Says GlobalData

Foam Finger

November 23, 2018 [Oil Review Middle East] – US is expected to spend US$521.4bn capital expenditure (capex) on 484 oil and gas projects by 2025, according to data and analytics company GlobalData.

A total capital expenditure (capex) of US$3.6 trillion is expected to be spent globally across oil and gas value chain on planned and announced projects during 2018 to 2025, the company added.

The company’s report: ‘Q3 Global Oil and Gas Capital Expenditure Outlook – Gazprom Leads New-Build Capex Outlook Among Companies has revealed that, globally, the US, Russia, and Canada are the top countries to lead the new-build capex outlook.

Russia and Canada are expected to spent US$317.3bn (192 projects) and US$309.8bn (119 projects), respectively.

In the upstream sector, Russia is expected to lead among countries with capex of US$77.5bn to be spent on 54 planned and announced fields globally. Brazil and the US follow, each with almost the same capex of US$70bn.

GlobalData’s report found that the US is expected to lead in the pipelines segment with capex of US$123.6bn to bring 165 planned and announced projects online by 2025.

In the gas processing segment, Russia is to spend US$40.8bn on 13 new projects, expected to come online during the outlook period. On the LNG liquefaction front, the US leads with estimated capex of US$216.4bn on 32 upcoming liquefaction terminals by 2025, while China leads in regasification capex, with US$18.1bn to be spent on 22 upcoming regasification terminals.

In the underground gas storage segment, Turkey leads with estimated capex of US$11.4bn to be spent on seven planned gas storage terminals by 2025, while for liquids storage terminals, the US leads with capex of US$9.3bn expected to be spent on 32 upcoming projects.

On the downstream side, India is expected to lead with estimated capex of US$89bn on the development of nine crude oil refineries globally by 2025. In the petrochemical sector, China is expected to lead with estimated capex of US$76bn to be spent on 215 upcoming petrochemical plants.

Lopez Obrador Says Mexico to Build an $8 Billion Refinery

 
Andres Manual Lopez Obrador Photographer: Cesar Rodriguez/Bloomberg
 
  • Mexico to start awarding construction contract by March 2019
  • Pemex plans to improve operations of current six refineries
Mexico plans to start awarding the construction of its seventh refinery as soon as March 2019, President Andres Manuel Lopez Obrador said at an event at the Dos Bocas port, in Tabasco, even as the nation´s refining system is operating at its lowest levels in three decades.

Unveiling a plan for the nation’s refining system, Lopez Obrador said Mexico will invest $8 billion in the new processing facility at Dos Bocas. "We are going to start the bidding process for the refinery by March at latest," he said to a cheering crowd in the sun-drenched town in the Gulf of Mexico, reiterating his intentions to boost fuel self-sufficiency and end long-term declines in oil output. Mexico’s oil production, on track for its 14th consecutive yearly decline, will rise "realistically" to 2.4 million barrels per day by 2024, he said.

Lopez Obrador said a lot of 566 hectares of federal land is ready for the new plant, which will have crude processing capacity of 340,000 daily barrels, making it Mexico’s biggest refinery. It will include 17 processing plants, and 93 storage tanks or facilities, and link up to the Dos Bocas maritime terminal. A pipeline will be built connecting the refinery to the port.

Companies such as Ica Fluor, a joint venture between Mexico’s Empresas ICA SAB and Fluor Corp. in the U.S., and U.S.-based Bechtel, have previously expressed interest in participating in the public tender for the refinery project. Lopez Obrador didn´t said if the state-owned oil company, Petroleos Mexicanos, will operate the new facility.

"In three years we will be producing the gasoline that we consume in the country, so that now we can lower the prices of the fuel," he said.

Lopez Obrador also said the government will increase Pemex’s budget by 75 billion pesos for 2019 so the company will be able to invest in a series of new projects to improve its operations. He reiterated his government will submit the 2019 budget to the Congress on December 15 and said the nation won’t use the oil contingency fund to finance the new oil policy.

Friday, December 7, 2018

OPEC Agrees on Larger-Than-Expected Cut After Marathon Talks

Trump has been openly supportive of Mohammed bin Salman during his anti-corruption crackdown in Saudi Arabia [Kevin Lamarque/Reuters]
[Kevin Lamarque/Reuters]

  • Group and its allies to remove 1.2m barrels a day from market
  • Russia plays deal broker in meetings with Iranians and Saudis
OPEC finally broke an impasse over production curbs, agreeing on a larger-than-expected cut with allies after two days of fractious negotiations in Vienna.

The cartel and its partners agreed to remove 1.2 million barrels a day from the market, with OPEC itself shouldering 800,000 barrels of the burden. Iran emerged as a winner from the contentious talks, saying it’s secured an exemption from cuts as it suffers the effects of U.S. sanctions.

Crude surged as much as 5.8 percent in London, raising the risk that the deal could anger U.S. President Donald Trump, who had urged the group to keep the taps open and prices low.

The breakthrough at the Organization of Petroleum Exporting Countries’ secretariat followed a series of bilateral meetings convened by non-OPEC member Russia, which emerged as the key broker between arch rivals Saudi Arabia and Iran. OPEC has been under increasing pressure from forces re-drawing the global oil map, leaving it ever more dependent on Russia’s support while also subject to vehement opposition from Trump.

The final deal is a surprise, since discussions had earlier centered on a proposed output reduction from OPEC and its allies of about 1 million barrels a day, with OPEC cutting 650,000 barrels of the total, according to delegates.

Rudder for Market

“Given how much expectations were down played around the outcome of this meeting, this result comes as a welcome surprise,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas. “OPEC has given the oil market a rudder that appeared largely absent yesterday.”

Producers will use October output levels as a baseline for cuts and the agreement will be reviewed in April. Russia has proposed a contribution equivalent to a 2 percent reduction from that month, according to one delegate, who said figures are still under discussion. Such a cut would equate to 228,000 barrels a day, Bloomberg calculations show, higher than its initial pitch for no more than 150,000 barrels a day.

“I’m confident that our resolve, that our professionalism and our willingness to achieve results is as strong as ever,” Russian Energy Minister Alexander Novak said of the so-called OPEC+ coalition. “In current conditions it’s extremely important to send a strong signal to the market.”

Much has changed for OPEC since 2016, when Russia and Saudi Arabia ended their historic animosity and started to manage the market together. The alliance has transformed the cartel into a duopoly in which the Kremlin is asserting its power.

“OPEC, or more precisely Saudi Arabia, has been the head honcho of the oil world for nearly six decades; yet these days it seems unable to make a decision without Russia’s blessing, let alone without risking the wrath of the U.S. president,” said Stephen Brennock, an analyst at PVM Oil Associates in London.

U.S. Pressure

OPEC’s largest producer Saudi Arabia, under economic pressure after a collapse in oil prices last month, has sought to walk a fine line between preventing a surplus next year and appeasing Trump. The president has taken to using his Twitter account to berate the group’s policies and sees low oil prices as key to sustaining America’s economic growth.

While ministers met on Wednesday, Trump tweeted that the “world does not want to see, or need, higher oil prices!”

He’s yet to give his view of the OPEC+ agreement. Benchmark Brent crude traded up 4.8 percent at $62.93 a barrel at 3:22 p.m. London time.

— With assistance by Dina Khrennikova, Annmarie Hordern, Alex Longley, Ilya Arkhipov, Julian Lee, Fred Pals, Nayla Razzouk, Golnar Motevalli, Heesu Lee, Pratish Narayanan, Salma El Wardany, and Christopher Sell

Thursday, December 6, 2018

President Trump Throws Hail Mary Tweet On Eve Of OPEC Meet


Saudi Trump
US President Donald Trump fired another shot across OPEC’s bow on Wednesday, a day before the oil cartel is set to meet in Vienna to discuss possible production cuts.

https://oilprice.com/Latest-Energy-News/World-News/President-Trump-Throws-Hail-Mary-Tweet-On-Eve-Of-OPEC-Meet.html

“The World does not want to see, or need, higher oil prices!” the Tweet read, in part.


President Trump has issued a long string of Tweets directed at OPEC this year, lashing out at OPEC in the past for restricting production, which raises prices as supply tightens.


Oil prices were down on Wednesday, as OPEC has failed to give the market a clear signal that it will cut production, and that Russia would be on board with a production cut as well, should one be implemented.

WTI was trading down 0.08% at 2:24pm EST at $53.21, with Brent crude falling 0.16% to $61.98.

The fate of the OPEC meeting scheduled for December 6 and 7 is murky at best, with OPEC reportedly urging both Libya and Nigeria—two members exempt from the previous round of production cuts—to join in the production cut for this round. Without their buy-in, other members may feel less inclined to pick up their slack this time around. Iran, too, is a wildcard in the production cut talks, with its oil minister staunchly refusing to negotiate any production cuts for as long as the country remains under U.S. Sanctions.

The two major players in the production cut talks, Saudi Arabia and Russia, seem to be on board with a production cut, but the volume of cuts has yet to be determined, and it is also uncertain if they will go it alone should others refuse. Qatar’s withdrawal from the cartel after its decades-long history with the organization is but another worrying signal to OPEC that it may find additional resistance tomorrow.

President Trump’s Tweet could be seen as a warning to the cartel to measure any production cuts carefully, but OPEC has long been the target of Trump’s tweets, even prior to his presidency, chastising the organization for restricting oil during the near-$100/barrel days.

By Julianne Geiger for Oilprice.com

Wednesday, December 5, 2018

China's Unipec to buy U.S. oil after Xi-Trump tariff truce

An oil tanker unloads crude at a terminal in Zhoushan, Zhejiang province, China July 4, 2018. REUTERS/Stringer/File Photo


By Meng Meng and Florence Tan

BEIJING/SINGAPORE (Reuters) - Chinese oil trader Unipec plans to resume U.S. crude shipments to China by March after the Xi-Trump deal at the G20 meeting reduced the risk of tariffs being imposed on these imports, three sources with knowledge of the matter said. 

The sources told Reuters that Unipec - trading arm of state refiner Sinopec is looking to import U.S. oil by March 1, which marks the end of a 90-day negotiating period agreed by the leaders of the world's two biggest economies. 

China's crude oil imports from the United States ground to a halt in October as this year's trade war between the two countries escalated. 

"Chinese buyers who want to buy U.S. crude will rush to import the oil during this window," a senior executive from Asia's largest refiner Sinopec said, adding that the oil has to arrive in China before March 1. 

"Oil prices are low, so it makes economic sense to store some crude as commercial inventories," said the executive, who asked not to be named. 

Sinopec said it has a policy not to comment on specific trade deals. Unipec did not respond to an email. 

Oil prices have slumped by around a third since early October amid an emerging glut, triggering expectations that the Organization of the Petroleum Exporting Countries (OPEC) will agree to supply cuts at a meeting this week.

It was unclear how much oil Unipec - China's largest crude oil importer - would order from the United States, but one of the sources said the company could lift a record volume of oil in January. 

China's previous record for a month came in January 2018, when it imported about 472,000 barrels per day (bpd) from the United States, according to Chinese customs data. 

Before the trade dispute erupted in mid-2018, China had become the largest importer of U.S. crude. China imported on average 325,000 bpd of U.S. crude in the first nine months of 2018 before imports fell to zero in October, customs data shows. 

Although crude oil was not included on Beijing's import tariff list, Chinese buyers started avoiding U.S. oil from mid-2018. 

U.S.-based trade and shipping sources said Unipec is back in the market, looking to buy U.S. crude and book ships for China. 

Unipec may have chartered VLCC Manifa to load U.S. oil this month, one of the sources said. Another said the company has provisionally booked a VLCC to load U.S. oil in January and make the 45-50-day voyage to China for $8.4 million. 

While China is expected to maximize U.S. oil imports during the 90-day window, the overall outlook for this trade flow in 2019 remained murky. 

"Tensions have eased between the two countries but we can't forecast what will happen after March," the Sinopec executive said. 

"There is a lot of pressure on both sides to reach a mutual agreement in 90 days."

(Reporting by Meng Meng in BEIJING and Florence Tan in SINGAPORE; Additional reporting by Devika Krishna Kumar in NEW YORK and Liz Hampton in HOUSTON; Editing by Henning Gloystein and Tom Hogue)

Tuesday, December 4, 2018

Qatar walks away from OPEC

Saad Sherida Al-Kaabi

https://www.petroleumafrica.com/qatar-walks-away-from-opec/

Qatar is leaving the Organization of Petroleum Exporting Countries (OPEC) on January 1. The nation, which will be the first Middle Eastern country to exit the cartel, was part of OPEC for more than six decades.

The nation’s state-run oil firm, Qatar Petroleum, issued the announcement in a series of tweets. The country’s last day as an OPEC member is January 1.

“The withdrawal decision reflects Qatar’s desire to focus its efforts on plans to develop and increase its natural gas production,” Saad Sherida Al-Kaabi, the country’s newly-appointed minister of state for energy affairs, said in one of the tweets.

The country has turned to gas as its main economic driver since being under a diplomatic and economic embargo by the other Middle Eastern countries over the past year-and-a-half which effects its oil funds.

“Achieving our ambitious growth strategy will undoubtedly require focused efforts, commitment and dedication to maintain and strengthen Qatar’s position as the leading natural gas producer,” Al-Kaabi said in one of the tweets

Iran's Rouhani threatens to cut off Gulf oil


https://s1.yimg.com/lo/api/res/1.2/opLige8A06NJkHkKv9bg6Q--/YXBwaWQ9eW15O3E9NzU7dz02NDA7c209MTtpbD1wbGFuZQ--/http://media.zenfs.com/en_us/News/afp.com/231f256b943fb0b843b641077cf564124caef66d.jpg 
 
 
Iran's President Hassan Rouhani struck a defiant stance against US sanctions on Tuesday, renewing his threat to cut off international oil sales from the Gulf. 
 "America should know... it is not capable of preventing the export of Iran's oil," Rouhani said at a televised rally in Semnan province.

"If it ever tries to do so... no oil will be exported from the Persian Gulf," he added.

since the 1980s, Iran has said repeatedly it would blockade the Gulf in response to international pressure but has never carried out the threat.

Washington has reimposed sanctions, including an oil embargo, since withdrawing from a landmark 2015 nuclear deal between Tehran and major powers in May.

It has vowed to reduce Iran's oil sales to zero, but has granted temporary waivers to eight countries.

Rouhani last threatened to close the Gulf in July when he warned the US "should not play with the lion's tail."

The president downplayed the economic impact of sanctions, accusing the media of exaggerating the country's problems.

"No hyperinflation, no massive unemployment will threaten us. People should stop saying such things in the papers," he told the crowd.

The latest inflation report from Iran's central bank says food prices rose 56 percent year-on-year in October.

Rouhani acknowledged there were "some problems", but said these would be addressed in the new budget plan to be presented on December 16. 

He said the government would maintain subsidies on essential goods and increase public sector wages and pensions by 20 percent.
 

Monday, December 3, 2018

China-Linked VLCCs Storing Iran Crude; Loading from Kharg Island: Sources


[S&P Global Platts] - In spite of the US sanctions on Iran, some Iranian crude exports are coming into the international market through non-Iranian companies that are offering their VLCCs for transporting as well as storing Tehran's oil, several oil shipping industry sources in Malaysia, Singapore, the UK and China said this week.

Coming soon after National Iranian Tanker Company-owned VLCC Dover transferring its condensate cargo into the CCPC Vanguard, a floating storage vessel in Malaysia's Batu Pahat, another Iranian VLCC, the Hedy, has just completed the transfer of heavy grade crude into the Alter Ego I, owned by Kunlun Holding, in the same region of Malaysia, sources tracking the developments said.

Kunlun, which bought the Alter Ego I earlier this year, has changed the name of the VLCC to Tian Ying Zuo and received Iranian crude, the sources said.

According to one of the sources, another VLCC, the Ataka, whose name is now changed to Tian Ma Zuo, was scheduled to load heavy Iranian crude from Kharg Island.

An NITC official declined to comment. A Kunlun Holding executive also declined to comment.

"I am not sure and I have not heard about this," a second Kunlun Holding official said when asked about Iranian crude being transferred into the Tian Ying Zuo, and the Tian Ma Zuo loading from Kharg Island.

The second Kunlun Holding official said the company did have 49% ownership of the CCPC Vanguard, but that stake had been sold two months ago. He declined to divulge the name of the buyer and claimed the company did not own VLCCs any more.

However, several owners, brokers and charterers told S&P Global Platts that it is possible for a company to control and still claim a lack of direct ownership of ships that are registered in the name of separate entities for corporate reasons, which can include efforts to reduce taxes.

A reply to an email sent to Kunlun Holding had not been received at the time of publishing this article.

Data from the UK-based global maritime consultancy, VesselsValue, confirmed that the names of both the Ataka and the Alter Ego I have been changed and they are now owned by Kunlun Holding.

Another shipping source separately confirmed that the Alter Ego I was purchased recently by a company that is part of the overall Kunlun Holding Group.

Data from cFlow, S&P Global Platts trade flow software, also showed the former Ataka at the Fujairah/Khor Fakken area when its signal was last received on November 19, while the former Alter Ego I was at Batu Pahat.

Ship-to-Ship Transfers
 
A Malaysian company, Petrotech Marine, was involved in the ship-to-ship transfer from the Hedy to the former Alter Ego I, a source tracking the movement of crude cargoes in the region said. A Petrotech Marine official declined to comment. A reply to an email sent to Petrotech had not been received at the time of publishing this article.

Iranian VLCCs occasionally do ship-to-ship transfers of crude and condensate in Malaysian ports such as Linggi and Batu Pahat, but a large volume of floating storage involves cargoes from other countries as well, said a shipping agent in Malaysia.

Since the US granted exemptions to importers from eight countries from the sanctions for six months under specific terms and conditions, there should not be any fuss over such trade with Iran, said a shipping consultant in Singapore.

However, sources tracking the Kunlun deal point out that the cargoes recently transferred in Malaysia left Iranian waters before the exemptions were announced.

Kunlun Holding Company Ltd (Kunlun Holding) markets itself as a one-stop solution provider for the oil and gas industry, and undertakes activities from the upstream to the downstream in the oil and gas value chain, an S&P Global Platts Ocean Intelligence, or OI report, said.

The Chinese company owns 50% of Kunlun Trading Co Ltd, which is involved in oil and LPG trading, 80% of Kunlun Shipping Co Ltd, and 100% of China Concord Petroleum Co Ltd, or CCPC, according to OI. Another entity, China Concord Investment Co Ltd, was wholly-owned by Kunlun Holding until May 2018, when its shares were transferred to the ownership of one of the group's directors, Xu Bin, according to OI.

When a group company has several subsidiaries, ships may be owned by one or many among them and tracing actual control is complicated, sources said.

Chinese companies continue to import Iranian crude and shipments are mostly delivered in ships owned by local entities to avoid sanctions-related complications, a shipping broker in Beijing said.

Cargo transfer in ship-to-ship areas of Malaysia ensures that Iranian ships do not always have to directly call Chinese ports and local buyers there can lift parcels in sizes and at times of their liking, sources said.