Posted on 12/20/2007 3:11:54 PM PST by knighthawk
LONDON, Dec 20 (Reuters) - Iran's largest supplier of gasoline, independent oil trader Vitol, has decided to end its long-running contract to provide the country with the fuel from next year, an industry source said on Thursday.
The source said Swiss-based Vitol has made the decision because it had made a loss of an estimated $70 million for the calendar year 2007 from its existing contract. The source did not mention any political considerations.
Vitol's spokeswoman and Iranian oil officials were not immediately available to comment.
Iran is the world's fourth-largest crude oil exporter but its refineries are struggling to fully meet domestic demand.
Western sanctions mean it is hard for the country to develop refineries and the need to import the fuel could make it more vulnerable to pressure over its nuclear programme.
Trading sources have said Vitol has been the biggest gasoline supplier to Iran, handling about 60 percent of the country's petrol imports.
The industry source said it is not clear how or through which intermediary Iran would get alternative supplies to replace those handled by Vitol. India, the Netherlands, France and the United Arab Emirates are traditionally Iran's primary suppliers.
Tehran is striving to reduce the costly gasoline imports, mainly by rationing. It also subsidises all fuel sold at the pumps -- whether imported or not -- so drivers pay just 1,000 rials (11 U.S. cents) per litre.
The introduction of rationing in June helped reduce import volumes of the fuel to about 315,000 tonnes of gasoline for October and November, or 88,000 barrels per day, another industry source said in November.
That is about a 60 percent cut from the pre-rationing level of 770,000 tonnes in June.
Earlier this month, Iran's oil minister, Gholamhossein Nozari, said Tehran would soon increase the monthly gasoline quota for private drivers to 120 litres from 100 litres.
Another official said Iran would end rationing by March 2009 and would boost production from domestic refineries. (Reporting by Ikuko Kao, editing by Anthony Barker)
Ping
Ha...that’s got to hurt the mad mullahs
I accept at face value that the company certainly didn’t want a repeat of a 70 million dollar loss. Still, I suspect something else is at play.
Who will step up to meet Iran’s need for gasoline? Nationalized industry doesn’t encourage capitalists.
Sanctions work.
Putin crony to the rescue?
Since it’s a Swiss/European company, I’m sure the decision was strictly economic.
Vitol is evidently a huge company, and with all their revenue maybe 70 million is not necessarily a deal breaker. Maybe they make it up in other ways. But I wonder also who thinks they can deal with these people and make a profit.
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