Tuesday 22 October 2019

Not plain sailing as Chinese LPG importers hide sanction-breaking deals


President Donald Trump. Photo: Reuters
President Donald Trump. Photo: Reuters

Saket Sundria and Dan Murtaugh

After being hit by the trade war and US sanctions on Iran, some Chinese buyers of liquefied petroleum gas (LPG) from the Persian Gulf nation are finding it's too tough a habit to kick.

China sourced around a fifth of its LPG - used as cooking fuel, in cigarette lighters and to make plastic - from the US before Beijing slapped a 25pc tariff on the gas last August as the trade tussle heated up. Buyers then turned to Iran, which accounted for around a third of imports in April, before President Donald Trump blocked all energy exports from the country in May.

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But some Chinese customers are still buying from Iran, according to Kpler. Based on ship-tracking data, the Paris-based energy researcher estimates that at least five supertankers loaded Iranian LPG in May and June that was destined for China. That would equate to around $100m of the gas, according to Bloomberg calculations.

"They've started using a variety of techniques to hide their activity," Ilya Niklyaev, an LPG analyst at Kpler, said in an interview. "Like switching off transponders as well as intentionally signalling wrong destinations and indicating loading ports in Qatar, Saudi Arabia or the UAE."

To avoid running foul of the US sanctions, LPG importers would have to turn to more expensive supplies from elsewhere.


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