Uncovering the Chinese Purchasers of Iranian Oil [UPDATED June 6, 2022]

Today it is widely acknowledged that China is principally responsible for keeping the Iranian regime in business through oil purchases that have totaled $22 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 therefore proven to be the savior of Tehran by continuing to import millions of barrels of oil every single day. Chinese imports have likely even exceeded the purchases 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 today. Now UANI has obtained documentation that provides a big 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, 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 70 different shipments of Iranian oil to China dating back to December 2019, a total of approximately 75 million barrels, out of a total of 571 million barrels of Iranian oil exported to China during that same period. Given the different risk factors between the few state importers and the vast number of independent teapots, we can reasonably assume from this 10% snapshot that the bulk of Iranian oil is indeed being imported by the teapots.

Available data, through May 2022, shows the top teapot refinery purchasing Iranian crude is Lawen Namu. Lawen Namu received at least 10 different shipments of Iranian crude oil, branded as crude and Oman crude. Together these shipments totaled approximately 14.8 million barrels of Iranian oil.

Top importer was Lawen Namu, 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 eight different shipments of Iranian crude, branded as Oman crude, and Iraqi crude oil. Together these shipments totaled approximately 8 million barrels of Iranian oil. 

The third biggest teapot importer on our list is Shandong Dongfang Hualong Industry & Trading Group (Hualong), granted its import license on the same day as Shengxing. Hualong has also received at least eight different shipments of Iranian crude oil, branded as Russian Urals or as “Mal Blend.” Together these shipments totaled more than 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.

Another big importer is Xintai Petrochemical (Xintai), which took in over 4.6 million barrels in at least six separate shipments under rebranded Malaysian oil. Xintai was approved by the NDRC for import allowance in June 2017, according to International Commodity Intelligence Services (ICIS).

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 June 6, 2022]

Refinery

Number of Shipments

Branded/Rebranded As

# of Barrels

Vessels Involved

LAWEN NAMU

10

Crude and Oman

14,859,744

ARZOYI, HERA, HECATE, ANTHEA, MEMPHIS

SHENGXING

8

Oman and Iraq

8,005,717

MARTINA, ERMIS, ANASTASIA I, CHOLA QUEEN, AVENTUS I, EASTERN PRIDE, BRAVA LAKE

HUALONG

8

Urals and Mal Blend

7,326,162

MARIA GRACE, PHOENIX I, SIMBA, ASTRID I, LEOPARD, IVY

SHANGANG GUOMAO

4

Malaysia and Bitumen Blend

5,525,078

GLORY FOREVER, LAUREN II, VESNA, SIMBA

XINTAI

6

Malaysia

4,557,530

CHOLA QUEEN, MARTINA, RANI

QINGYUAN

2

Oman and Malaysia

3,061,521

LUNA LAKE, MEMPHIS

SHENCHI

4

Mal Blend

2,709,875

BRIGHT SONIA, KARMA, DIAMOND

KELIDA

3

Oman and Malaysia

2,098,785

CLYDE NOBLE, CAROLINA

JINCHENG

1

Oman

1,999,367

ETHAN

KIDING

1

Crude

1,843,156

BOREAS

XINYUE

2

Crude

1,717,867

PALMER, ABYSS

XINZHUOYUE

2

TBA

1,501,419

ANASTASIA I, BRIGHT SONIA

OCEANIC

3

TBA

1,341,167

PHOENIX I, DIAMOND

YINGJIRUI

1

Nemina

1,125,532

MEMPHIS

HANKUN ENERGY

1

Light Crude

1,090,550

ALANA

ZHEJIANG WUCHAN

1

Bitumen Blend

1,078,153

MEMPHIS

ZHONGCHEN

1

Bitumen Blend

1,014,631

OAKA

WANTONG

1

Crude

842,920

AMENITY

CGN

1

Mal Blend

717,867

CLYDE NOBLE

GEA

1

Mal Blend

717,867

CAROLINA

ZHOUSHAN JIAOTOU

1

Bitumen Blend

691,500

ELISA SEA

CHAMBROAD

1

Bitumen Blend

684,399

CHAO XING

HANYUAN ENERGY

1

Crude

684,399

VENICE

MEIJIANENG

1

Oman

679,745

PHOENIX I

YINGYU ENERGY

1

Mal Blend

669,668

WINSOME

HEBEI XINHAI

1

Crude

646,200

HELIOS

GAIDA

1

Crude

564,000

SIMBA

sHANDONG pRO
(Credit: Reuters Muyu Xu)