Iran to start crude exports from Jask terminal in June

Iran will start crude shipments next month from its new 1mn b/d Jask terminal outside the strait of Hormuz.

State-owned NIOC said that operations have begun to start injecting oil into the 1,000km Goreh-Jask pipeline, which will be inaugurated "in the near future."

The 46-inch diameter pipeline connects Iran's southwest Bushehr province to Jask, on the country's southern Gulf of Oman coast. The Jask terminal will provide an alternative to the Kharg Island loading point — from where most Iranian crude is shipped — and smaller terminals Lavan, Sirri and Soroush, all of which are located further into the Mideast Gulf. Iranian condensate exports are served by the Assaluyeh terminal.

Iran has overwhelmingly relied on Kharg Island for its crude shipments. Argus tracking indicate that of the average 2.036mn b/d that Iran exported in the January-March 2018 period — the most recent quarter before the introduction of the latest US sanctions — Kharg Island undertook or provided crude as part of co-loads for 1.974mn b/d, or nearly 97pc.

More recent records of Iranian exports have been muddied by the tendency of tankers to turn off their AIS transponders. Analysts say that Iranian crude exports have risen to between 650,000-750,000 b/d in recent months. These mostly go to some Chinese independent refiners, and some to Syria.

Iran's efforts to raise its export capacity come as discussions continue in Vienna between Tehran and the White House to pave the way for the US to return to the 2015 Joint Comprehensive Plan of Action (JCPOA) nuclear deal. This could lead to an easing of Washington's commercial sanctions against Iran.

Iran's deputy foreign minister Abbas Araqchi signalled that today's meeting of the JCPOA Joint Commission will conclude two weeks of negotiations, releasing delegates to return to their respective capitals for consultations.

"There are some key issues remaining which require further discussions and decision making in our capitals," Araqchi said. "The result is that we are now in a position whereby we can reach a complete conclusion. There are still some key issues that need resolving, but on the other issues we have an agreement, and the draft texts have been written."

Iran's vice-president Eshaq Jahangiri in early May forecast that Iran could bolster its crude and condensate exports to 2.5mn b/d once US restrictions are lifted, but this is not assured. Market participants say that NIOC has in the past required letters of credit to undertake its term crude sales, meaning the pace of any supply return is in the hands of lenders as much as policymakers. Banks can be cautious in facilitating payments to Iranian entities, for fear that they may fall foul of US sanctions and endanger their US dollar exposure.

By Ruxandra Iordache and Nader Itayim