Iran and China have agreed on a new arrangement for crude oil payments under which Beijing will reimburse part of the money owed to Tehran in cash, a leading Iranian trader said on Monday.
China is the biggest buyer of Iran’s crude oil, purchasing more than 440,000 barrels each day, but Tehran imports goods instead of hard currency for its oil sales.
Asadollah Asgarowladi, chairman of Iran-China Chamber of Commerce, said the two countries have now agreed on making the payments partly in cash or transferring the money to a third country for imports.
Under the deal between Iran’s Ministry of Petroleum and the Chinese government, 65% of the oil money will be used to import goods and the remaining 35% will be paid in cash, he said.
“Ministry of Petroleum may allow the Central Bank of Iran to use the cash for purchase of goods from South Korea, Japan or other countries. Otherwise, the Ministry will deposit it in the treasury after taking its share,” Mehr News Agency quoted Asgarowladi as saying.
Iran can sell around 1 million barrels per day of oil under a preliminary nuclear agreement but the country has to use a maze of routes to receive its money.
Asgarowladi however said there is no problem for payments of the oil money by the Chinese, without specifying the currency with which the two countries are trading.
China is also Iran’s biggest trade partner. Asgarowladi said annual transactions border around $52 billion, with Iran’s exports accounting for 55% of the trade.
Transactions, he said, will grow 20% every year under Iran’s vision plan irrespective of the results of nuclear talks which are currently at the final stretch.
“Trade relations between Iran and China are looked at from a long-term perspective and are not tied to the continuation or removal of sanctions.”
Asgarowladi, however, acknowledged that “minor differences” exist between the two countries over the quality of the Chinese goods.
Chinese goods have flooded the Iranian market in recent years, leaving many domestic production units in dire straits.
“We believe that the quality of Chinese goods exported to Iran must be improved and the ground be paved for an increase in investments by both countries in each other and by their joint companies,” Asgarowladi said.
He also said there are plans in the works for joint production in Iran which targets the regional market.
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