Uncovering the Chinese Purchasers of Iranian Oil [UPDATED January 31, 2023]

China is principally responsible for keeping the Iranian regime in business through oil purchases that have totaled $47 billion since President Joe Biden assumed office.  This is despite U.S. sanctions that were reimposed in 2019 with the stated aim of reducing Iranian oil exports to zero. China has proven the savior of Tehran by continuing to import millions of barrels of oil every single day. Chinese imports have likely exceeded those made when the trade was not subject to U.S. sanctions.

While UANI has successfully pinpointed the more than 200 foreign oil-carrying “Ghost Armada” ships facilitating the trade, it has been difficult to identify the specific buyers – until recently. In recent months UANI has obtained documentation offering major insight into who exactly is funding this illicit and uniquely lucrative trade.

The Purchasers

Data received and reviewed by UANI shows that Iranian oil is being imported by China’s officially non-state, semi-independent “teapot” petrochemical refiners.  Teapots were originally permitted to import crude, subject to centrally imposed quotas, starting in July 2015. Since then, China’s economic planning agency, the National Development and Reform Commission (NDRC), has granted tens of new licenses annually. Estimates of the number of teapots hover around 150.

Today, the teapots import approximately one-fifth of all China’s oil needs. Around 70% of China’s teapot oil processing takes place in the eastern coastal province of Shandong, south of Beijing and north of Shanghai. For Iranian oil purchases, the teapots manage to buy at steep discounts -- at least $4 a barrel below benchmark Brent. The Iranian origin of oil is also concealed, by rebranding as either Omani Crude, Iraqi Crude, Russian Urals, Bitumen Blend, Nemina, or Malaysian Blend.

The fact that teapots – rather than major state actors – would import the bulk of Iranian oil makes sense from China’s perspective. Since the U.S. has, in fact, sanctioned Chinese state-owned imports in the past, such as Zhuhai Zhenrong, the decision to import Iranian oil via dozens of small unaffiliated “non-state” firms helps obscure the Chinese government’s role and protect its own big firms from scrutiny, accountability, and attendant sanctions. By contrast, with their small size and limited business operations, teapots are both hard to uncover and not exposed to the U.S. financial system. In conjunction with the clear lack of U.S. enforcement, the threat of sanctions is, therefore, far less of a constraining factor. 

UANI has now obtained documents naming the purchasers of over 180 200 different shipments of Iranian oil to China dating back to December 2019. These shipments represent over 222 million barrels out of a total of over 711 million barrels of Iranian oil exported to China during the same period. Given the different risk factors between the few state importers and the vast number of independent teapots, we can reasonably infer from this 30% snapshot that the bulk of Iranian oil is indeed being imported by the teapots:

Available data - through January 2023 - shows the top teapot refinery purchasing Iranian crude is Lawen Namu. Lawen Namu received at least 29 different shipments of Iranian crude oil, branded as crude, Oman crude or Nemina. Together these shipments totaled approximately 39 million barrels of Iranian oil.

Lawen Namu is a trading company based at the key port of Qingdao in Shandong province. In January 2021, S&P Global noted that Lawen Namu’s oil imports had “jumped 212%” from the previous month, while it classified most of its imports as “blended grades” from Oman, West Africa, and Russia.”

The second biggest teapot importer is Shandong Shengxing Chemical Co., Ltd. (Shengxing). According to Global Trade Alert, Shengxing was granted its import license on May 23, 2018,  perhaps not coincidentally, just two weeks after President Trump announced the U.S. withdrawal from the Iran nuclear deal (JCPOA). Shengxing has received at least 23 different shipments of Iranian crude, branded as Oman crude, and Iraqi crude oil. Together these shipments totaled approximately 20 million barrels of Iranian oil. 

The third biggest teapot importer on our list is Shandong Dongfang Hualong Industry & Trading Group (Hualong) followed by Shangang Guomao. Hualong was granted its import license on the same day as Shengxing. Hualong has also received at least 17 different shipments of Iranian crude oil, branded as Russian Urals or as “Mal Blend.” Together these shipments totaled more than 14.7 million barrels of Iranian oil. Vessels that are carrying oil rebranded as “Mal Blend” typically export directly from Iran and then engage in a very short ship-to-ship (“STS”) transfer with a vessel in Iranian waters. This allows the vessel to receive new documentation claiming the oil is Malaysian, instead of Iranian.

In addition to documentation obtained by UANI, the Wikiran website cites a further six teapot refineries - Lihuayi Lijin Refining & Chemical Co. Ltd Shandong Tianhong Chemical Co. Ltd Henan Fengli Petro-Chemical Co. Ltd Shandong Kenli Petrochemical Co. Ltd Qirun Group Co. Ltd Dongying Lianhe Petrochemical Group Co. Ltd. (Fuhai Group) – reportedly accounting for a monthly delivery of four million barrels over a one year period and in apparent collaboration with the Turkish energy giant, ASB Group.

The full table of teapot refiners importing Iranian oil is listed in descending order from largest importer by barrels below. UANI will continue to update this chart as we receive more information on the purchasers of Iranian oil in China [Table Updated January 30, 2023]