Africa-Press – Eritrea. The petrochemical company Hengli, one of the largest independent refining companies in China, has begun shifting towards purchasing oil from West Africa and the Middle East following U.S. sanctions imposed on it for allegedly buying Iranian oil.
According to trade sources, the company has purchased at least two million barrels of West African crude for delivery in June and July, and is in talks to secure additional shipments of African and Middle Eastern crude that are not subject to U.S. sanctions.
The U.S. Treasury Department imposed sanctions on Hengli’s refinery in April, accusing it of purchasing billions of dollars worth of Iranian oil as part of Washington’s campaign to reduce Tehran’s oil revenues. However, the company denied these allegations and announced that it would pursue legal avenues to challenge the sanctions and seek their removal.
Hengli operates a refinery with a processing capacity of about 400,000 barrels per day in Dalian, northeastern China. Sources in the energy sector indicate that the sanctions have prompted the company to seek new suppliers of conventional oil to avoid any transactions that could expose its business partners to secondary U.S. sanctions.
This shift comes at a time when independent Chinese refineries are facing a decline in Iranian oil supplies due to the war on Iran and increased U.S. scrutiny on its oil exports, leading to a drop in China’s imports of Iranian crude to about 1.19 million barrels per day in May, the lowest level since September.
Additionally, the decline in supplies has led to a reduction in Hengli’s oil inventories, forcing it to cut its operating rates in June to below 70% compared to over 80% in May.
Analysts believe that Hengli’s move towards West African crudes could boost Asian demand for Nigerian and Angolan oil in particular, as African oil-producing countries benefit from the ongoing shifts in global energy trade due to the war on Iran and supply disruptions across the Gulf and the Strait of Hormuz.
