The Secret China Iran Oil Deal At The Heart Of One Belt One Road Project

[Qanoil + 116]

A secret oil deal between China and Iran at the heart of the One belt One Road project will change the geopolitical balance of power in the Middle East. The manufacturing products created by utilizing cheap Iranian resources will be used to crack the western markets through the China-Iran axis along with unrestricted access to Iranian military bases. As always Indian policymakers have been caught in this changing dynamics leaning heavily on one player after other without a clear vision of its own.

   Contents

   1  The Secret China Iran Deal
   2  The 12% Discount
   3  One Belt One Road
   4  The Military Element
   5  Iranian Sanctions & JCPOA
   6  Indian Energy Dependence

The Secret China Iran Oil Deal At The Heart Of One Belt One Road Project

[footeab@yahoo.com + 2,187]

Ok, is it just me, or does everyone's Snark Hubris Intestinal Totality(S.H.I.T)scale ping the Bull meter when someone uses the word "secret" and then exhaustively goes over the details...

As for the actual statement... IF Iran is going to go to ~10Mbbls/day or more just for China, then Kuwait, S. Arabia, Sudan etc will have more than enough for India to have a nice juicy plethora of options and China will be the idiot  nation dependent upon a SINGLE supplier. 

[Qanoil + 116]

10 hours ago, footeab@yahoo.com said:

IF Iran is going to go to ~10Mbbls/day or more just for China, then Kuwait, S. Arabia, Sudan etc will have more than enough for India to have a nice juicy plethora of options and China will be the idiot nation dependent upon a SINGLE supplier. 

China is not single sourcing oil supply from 1 nation.  Iran is only one aspect of securing oil supplies for China.  Look also at oil & gas supplies to China from Russia and Africa and Venezuela, in addition to Iran.

If you read the full article, China is throwing an economic lifeline to Iran's oil industry, in order for Iran to skirt U.S. sanctions.  Very similar to what China has done throwing an economic lifeline to Russia for its gas (via pipeline) and to Venezuela for its ultra heavy crude oil.  

This is a logical strategy for China as it attempts to reduce purchasing oil and gas and LNG and natural resources from countries that favor the U.S. (such as Australia) and instead build economic and military to countries that oppose the U.S. (e.g. Iran, Russia, Venezuela).  Add to the mix China's attempts in the last couple decades to slowly convert Africa to become an economic colony to China, as it secures oil and gas and natural resources from very corrupt African leaders.  Corrupt African leaders bought and paid for.  Notice China's recent pivot away from purchasing Australian natural resources after Australia spoke out against the turmoil in Hong Kong.

Oil is being used as an economic lever and economic weapon by China against the U.S. and U.S. allies, while China provides provides oil money cash to failing countries that do not side with the U.S. (provided the failing countries have oil).

What China is doing with securing oil and natural resources from countries that oppose the U.S. and its allies is a thumbnail writ large of the current Cold War between China and the U.S.

 

[Dan Warnick + 6,100]

4 hours ago, Qanoil said:

China is not single sourcing oil supply from 1 nation.  Iran is only one aspect of securing oil supplies for China.  Look also at oil & gas supplies to China from Russia and Africa and Venezuela, in addition to Iran.

If you read the full article, China is throwing an economic lifeline to Iran's oil industry, in order for Iran to skirt U.S. sanctions.  Very similar to what China has done throwing an economic lifeline to Russia for its gas (via pipeline) and to Venezuela for its ultra heavy crude oil.  

This is a logical strategy for China as it attempts to reduce purchasing oil and gas and LNG and natural resources from countries that favor the U.S. (such as Australia) and instead build economic and military to countries that oppose the U.S. (e.g. Iran, Russia, Venezuela).  Add to the mix China's attempts in the last couple decades to slowly convert Africa to become an economic colony to China, as it secures oil and gas and natural resources from very corrupt African leaders.  Corrupt African leaders bought and paid for.  Notice China's recent pivot away from purchasing Australian natural resources after Australia spoke out against the turmoil in Hong Kong.

Oil is being used as an economic lever and economic weapon by China against the U.S. and U.S. allies, while China provides provides oil money cash to failing countries that do not side with the U.S. (provided the failing countries have oil).

What China is doing with securing oil and natural resources from countries that oppose the U.S. and its allies is a thumbnail writ large of the current Cold War between China and the U.S.

 

If China is buying oil from Iran, the U.S. Iranian sanctions can be used to freeze Chinese or Chinese related financial assets and transactions in or through the U.S.  Insurance on carriage of oil can also be blocked, essentially making any vessel carrying Iranian oil to a customer of Iran null and void.  China can use her own ships and/or ships of Iran, but they run a risk of the United States fully imposing the sanctions and going after Chinese banks and companies that do business with China.

I did a bit of research on this previously, referencing the sanctions themselves as source; not using any other source, and the penalties, if the U.S. chooses to fully implement them, are extremely broad and encompassing.

So, if China is taking this step they are indeed actively playing cold war games of the highest order, challenging U.S., and Trump, resolve.

[footeab@yahoo.com + 2,187]

7 hours ago, Qanoil said:

China is not single sourcing oil supply from 1 nation.  Iran is only one aspect of securing oil supplies for China.  Look also at oil & gas supplies to China from Russia and Africa and Venezuela, in addition to Iran.

If you read the full article, China is

IF you go straight economic route, then China would be stupid to NOT buy all of their oil @15% discounted oil from IRAN --> making them dependent on IRAN.  What Currently is true does not matter in the future. The article is pointless as this "secret" with details has been published far and wide by everyone for weeks now. 

IF it is 100% about resource gathering as they have tried doing and have done to country after country after country, with guaranteed quotas to China, then there is no way this does not end in anything other than a gigantic war as eventually the other side(and I do not think the USA will be the instigator here, but rather India or the EU(both resource poor), as USA has Canada, but other powers will try to rope the USA into this mess) figures out that no, there is no more lithium, cobalt/nickel, copper for them, and their utopian BS dreams of nirvana on earth will not happen. 

Edited July 29, 2020 by footeab@yahoo.com

[Strangelovesurfing + 737]

Another angle, the CCP would secure a land route for oil imports from Iran through Pakistan's economic corridor bypassing possible naval blockades. They would just need to build a pipeline from Iran into Pakistan.

Edited July 29, 2020 by Strangelovesurfing

[0R0 + 6,251]

"The final manufactured products will then go to the Western markets through new transport links, also planned, financed, and managed by China. "

Seems far fetched considering US sanctions, who would import the Iranian stuff? It would put the Chinese companies involved on the Iran sanctions list and cut them off from the dollar clearing system. What's made in Iran stays in Iran, or goes to the few willing to trade with it without fear of US sanctions.

The scope is unrealistic as well,  10MBbl/d is more than Iran can consume in Chinese goods and investment.

The part about using Cheap Iranian labor, presumably from the rural poor seems like a good deal for China as its cheap migrant labor pool is contracting rapidly this decade after contracting steadily in the 2010s. It will be about 1/3 smaller than its current reduced size and 1/2 of what it was in 2008-2010. That is interesting apropos this article about Chinese attempts to grapple with its demographic problem.

https://foreignpolicy.com/2020/06/30/chinese-communist-party-han-baby-boom-sterilization-ethnic-minorities/

Obviously if they can't produce with locals any longer because they need them for an expanded army while births continue declining, then getting politically friendly cheap labor would be a good thing to do, just that the portion of Iranian labor that is cheap is also weakly educated. That makes for not that great a deal. Besides, China currently has a large chunk of its own cheap labor uniemployed, about 200 million in May.

[Qanoil + 116]

13 hours ago, Strangelovesurfing said:

Another angle, the CCP would secure a land route for oil imports from Iran through Pakistan's economic corridor bypassing possible naval blockades. They would just need to build a pipeline from Iran into Pakistan.

Here is the China Central Asia Gas Pipeline.

 

And a bit more which includes oil pipelines

 

China-Central Asia gas pipeline transports over 19 bln cubic meters in H1

The China-Central Asia Gas Pipeline has delivered over 19 billion cubic meters of natural gas to China in the first half of this year, the PetroChina West Pipeline Company said Thursday.

The pipeline runs from the border between Turkmenistan and Uzbekistan, passes through Uzbekistan and Kazakhstan and links up with China's West-to-East Gas Pipeline in Khorgos of Xinjiang Uygur Autonomous Region.

With a total length of 1,833 km and a designed annual gas transmission capacity of 60 billion cubic meters per year, the pipeline has been in operation for 10 years.

It had delivered a total of 316 billion cubic meters of natural gas to China by the end of June, benefiting over 500 million people in China, including residents in the Hong Kong Special Administrative Region.

 

It actually should not be too difficult to add Iranian oil and gas pipeline exports to China.

 

See this link for the full size of the map above.  Be aware this map and info is almost 10 years old, but is included in this comment because of the higher quality map and good overview of information.

Chinese energy infrastructure in Central Asia

IV.       Chinese Oil and Gas Pipelines

For China, the other half of the infrastructure puzzle is developing overland energy corridors, namely oil and gas pipelines from Iran and the Caspian Region.  This project started in the 1997, when Kazakhstan and China agreed to a “project of the century,” with Beijing promising to invest nearly $11 billion in Kazakhstan’s oil infrastructure and pipelines.  Development, however, was slow, and it took until 2003 for China to begin making waves in the Kazakh oil sector, when the Chinese National Petroleum Company bought 100% of the shares in the Northern Buzachi fields (Mangistau region) from Chevron-Saudi consortium.  And from that point on, the Chinese government has worked steadily to acquire more production companies in the field, as well as joint deal with Kazakh state owned companies like KazMunaiGaz. 

[Qanoil + 116]

15 hours ago, footeab@yahoo.com said:

IF it is 100% about resource gathering as they have tried doing and have done to country after country after country, with guaranteed quotas to China, then there is no way this does not end in anything other than a gigantic war as eventually the other side(and I do not think the USA will be the instigator here, but rather India or the EU (both resource poor), as USA has Canada, but other powers will try to rope the USA into this mess) figures out that no, there is no more lithium, cobalt/nickel, copper for them, and their utopian BS dreams of nirvana on earth will not happen. 

Yes, that is what I was alluding to earlier.  The new Cold War between China's CCP and most Western democracies is heating up.  Supply of natural resources (including oil and gas) will probably be a key escalation point.

[Qanoil + 116]

5 hours ago, 0R0 said:

Seems far fetched considering US sanctions, who would import the Iranian stuff? It would put the Chinese companies involved on the Iran sanctions list and cut them off from the dollar clearing system. What's made in Iran stays in Iran, or goes to the few willing to trade with it without fear of US sanctions.

If the new cold war between China and U.S. heats up (which seems likely to me) then China may import all kinds of stuff from Iran, while drastically reducing imports from the U.S.

CCP has already been expanding trade with countries that the U.S. sanctions, such as Venezuela and Russia, so adding Iran to CCP's list of favored nations to trade with is not a stretch.

If one takes the view that the CCP has been assisting in fomenting unrest in the U.S. with the violent riots (via Alinsky tactics) and the spread of Covid 19, then my comment here might make more sense.

Meanwhile, it looks like oil and gas are just another leverage tactic in the cold war that is heating up.

[Dan Warnick + 6,100]

15 minutes ago, Qanoil said:

CCP has already been expanding trade with countries that the U.S. sanctions, such as Venezuela and Russia, so adding Iran to CCP's list of favored nations to trade with is not a stretch.

Just to clarify, as far as I know, Russia is not under U.S. sanctions.  And also, as far as I know, China ceased oil purchases from Venezuela.  Has this situation changed?

The Iran Sanctions are in full force though, which, if China were to begin purchasing even 1 Mbbls/day or more, would blatantly challenge the sanctions and put China at risk of far reaching financial repercussions by the U.S.  If China were to do this, It occurs to me that President Trump may call U.S. debt held by China into question, further complicating the relationship, hence "cold war" level actions.  I am NOT saying that the President, via the legal scope of the Iran Sanctions, would have a leg to stand on, but I can easily see the President making a lot of bad press about such actions (it is an election year  ).

[Qanoil + 116]

10 minutes ago, Dan Warnick said:

Just to clarify, as far as I know, Russia is not under U.S. sanctions.  And also, as far as I know, China ceased oil purchases from Venezuela.  Has this situation changed?

In my general view, Russia and Venezuela are still being pressured by the U.S.  Meanwhile, China has expanded - not reduced - its interactions with countries that the U.S. is pressuring.

Russia and Ukraine Sanctions, Department of the Treasury

and

China Continued Buying Venezuelan Oil Despite U.S. Sanctions

[Dan Warnick + 6,100]

35 minutes ago, Qanoil said:

In my general view, Russia and Venezuela are still being pressured by the U.S.  Meanwhile, China has expanded - not reduced - its interactions with countries that the U.S. is pressuring.

Russia and Ukraine Sanctions, Department of the Treasury

and

China Continued Buying Venezuelan Oil Despite U.S. Sanctions

Fair enough, and thanks for the updates.

[0R0 + 6,251]

5 hours ago, Qanoil said:

For China, the other half of the infrastructure puzzle is developing overland energy corridors, namely oil and gas pipelines from Iran and the Caspian Region.  This project started in the 1997, when Kazakhstan and China agreed to a “project of the century,” with Beijing promising to invest nearly $11 billion in Kazakhstan’s oil infrastructure and pipelines.  Development, however, was slow, and it took until 2003 for China to begin making waves in the Kazakh oil sector, when the Chinese National Petroleum Company bought 100% of the shares in the Northern Buzachi fields (Mangistau region) from Chevron-Saudi consortium.  And from that point on, the Chinese government has worked steadily to acquire more production companies in the field, as well as joint deal with Kazakh state owned companies like KazMunaiGaz. 

I underestand the physical pipeline buildout, indeed, much of China's steel production these days are pipeline tubes, But that is only half the problem they face in having Iranian energy go through the land route where the Kazakh and Turkomen populations that are fiercely independent, decentralized and autonomous and hate China only a bit less than Russia. Strictly a rented friendship. Having competing Iranian product run overland through these countries is asking to be cut off when any trouble pops up. These are not places you invest megalithic projects without having the expectation that they would be eventually cut off, destroyed or nationalized. Once the flows go through, the ability to express solidarity with Uighurs may be too tempting regardless of what deals they cut with the governments. The infrastructure would be a tempting target, the planned rail, the existing and expanded pipelines, and roads in construction.

I believe the BRI projects in general are a waste disposal  function for the Chinese economy's excess of cement and steel production and large scale infrastructure construction workers, who have nothing to do in China that makes any sense, and that is one way of keeping them employed. The highly speculative relationship building is only as valuable as the bribery cash flow stream the Chinese can supply the local governments. Not very promising for China strategically.

 

.

[0R0 + 6,251]

I should add, that the Saudi Terrorist intelligence operations run throughout the region from all around Iran's borders to the NE And can easily flare up terrorism in the region were Iran to actually obtain an economic lifeline funded with an oil pipeline flow through the central Asian mountains. It is likely that Saudi would blow up anything operating in this corridor using its connections from Afghanistan and the locals throughout the entire corridor. The characteristic Saudi method would be to wait for a large scale investment to be made, then blow it up bit by bit.

The pipeline would need to run through Nepal for security, where it is within easy  reach of India, to whom Nepalese territory is militarily transparent, if China were to avoid the risk of the Moslem populations of the valleys and mountains of Central Asia blowing it up.  Does not look like the current carve out of a strip of Nepal's border region by China is going to get it anywhere better strategically. It is still in existential danger from being cutoff from energy as they are throughout the Indian Ocean and the S China sea and the Islands surrounding it.

Their geography still doesn't allow for China to obtain any commodities reliably but through Russia, and that is so long as Russia continues its symbiotic relationship with China. They are no more secure in supply chains over land than they are via the sea, and the transport is not just 3 times more expensive by land, but the security is both far more costly and difficult. It also requires suppression of a millennium long old war between Iran's Shia and the surrounding Sunni both South and North. They are setting themselves up to be Russians in Afghanistan. The security commitment would be more costly than the benefit from the trade.

I think the Chinese are disregarding how effective the Saudi religious leadership and pile of money are in running asymmetric warfare, particularly effective against large long infrastructure projects.

[epchkm + 6]

China is hoping after the  elections, assuming a change in presidency, that Iran sanctions will not be enforced like it is now.  The new President might not change the Iran policy but can go easy on enforcing sanctions.

[0R0 + 6,251]

On 7/29/2020 at 3:09 PM, footeab@yahoo.com said:

IF you go straight economic route, then China would be stupid to NOT buy all of their oil @15% discounted oil from IRAN --> making them dependent on IRAN.  What Currently is true does not matter in the future. The article is pointless as this "secret" with details has been published far and wide by everyone for weeks now. 

IF it is 100% about resource gathering as they have tried doing and have done to country after country after country, with guaranteed quotas to CSehina, then there is no way this does not end in anything other than a gigantic war as eventually the other side(and I do not think the USA will be the instigator here, but rather India or the EU(both resource poor), as USA has Canada, but other powers will try to rope the USA into this mess) figures out that no, there is no more lithium, cobalt/nickel, copper for them, and their utopian BS dreams of nirvana on earth will not happen. 

See Quad post some weeks ago. USA is already roped in and will be in the war. China's partners would be the ones blockaded, not China. As they generally have no navies or air forces, and a single port of large  scale shipping capacity. Oil from the Russian East coast is easy to block, and Gulf oil could cooperate for a price. Thus simply not ship, but for Iran, which would simply be stopped. After that had sunk in for a while, China would eventually be stripped of the island bases they built in Philippine territory and Indonesian waters, and ultimately be challenged by US Aussie, Japanese and Indian bases replacing their people in those same bases. If they resist they lose their navy.

[waltz + 140]

@Qanoil,  What exactly did China receive in their dealings with Venezuela?  They gave sixty some billion in loans and are still owed at least a third of that.  They also have suspended all but interest payments since 2016/2017ish.  
 

waltz

[0R0 + 6,251]

41 minutes ago, waltz said:

@Qanoil,  What exactly did China receive in their dealings with Venezuela?  They gave sixty some billion in loans and are still owed at least a third of that.  They also have suspended all but interest payments since 2016/2017ish.  
 

waltz

The portion of their reserves that is not at the Fed, about $2 Trillion is composed of these kinds of bonds from various BRI project countries, and various other IMF basket bonds. .

[waltz + 140]

@0R0 these are direct loans with no actual collateral other than at the barrel of a gun.  Any incoming regime in Caracas, who would almost assuredly align with Washington could, as in it is possible, just say sorry nope we do not recognize those debts because they went to off book accounts.  The CCP has put themselves in a pickle if they can not continue to corrupt and are called to account for their past dealings.  They can not afford to drop a billion here, 5 there and 20 in Venezuela.  Venezuela will never be able to pay that back without another 20-50 billion, probably more, invested in PDVSA.  Who is going to loan that money when it is going to China instead of reinvestment?

China walked from Venezuela, I think they have written it off and told Russia good luck.  Rosneft at least got half of Citgo and controlling stakes on the ground for their troubles.

 

waltz

[footeab@yahoo.com + 2,187]

Iran/China would have to conquer Turkenistan.  There is no way in this world they will allow an oil/gas pipeline through (other than small) as this would then compete DIRECTLY with their OWN massive amounts of NG which has no home as RUSSIA has purposefully blocked Turkmenistan from competing against them in Europe.  That is main reason why Russia invaded Osotia in the Cuacasus region as this was the route for Turkmenisatan gas or possibly Iranian natural gas.

[Qanoil + 116]

10 hours ago, waltz said:

@Qanoil,  What exactly did China receive in their dealings with Venezuela?  They gave sixty some billion in loans and are still owed at least a third of that.  They also have suspended all but interest payments since 2016/2017ish.  

 

9 hours ago, 0R0 said:

The portion of their reserves that is not at the Fed, about $2 Trillion is composed of these kinds of bonds from various BRI project countries, and various other IMF basket bonds. .

 

Its is geopolitical strategy for CCP to purchase Venezuelan oil to counter U.S. sanctions. 

China is playing the long game on return on investment in giving aid to countries that are sanctioned by U.S.  Purchasing oil from these countries is one aspect of the incrementally increasing cold war heating up between the CCP government and the U.S. government.

 

August 2019     Venezuela Secures New Chinese Oil Investment

The move defies the US embargo’s secondary sanction provisions targeting foreign firms trading with Venezuela.

 

June 12 2020     China Continued Buying Venezuelan Oil Despite U.S. Sanctions

Oil shipments from Venezuela to China continued even after the United States tightened the screws on Venezuelan oil exports last August, threatening sanctions on all companies doing business with Nicolas Maduro’s government, Reuters says in a special report, quoting ship-tracking data, PDVSA documents, and oil analysts.

June 17 2020     Venezuela Is Still Exporting Oil To China Despite Sanctions

Venezuela is still sending oil to China despite stifling U.S. sanctions, Bloomberg has reported, citing shipping data from Kpler.

[waltz + 140]

@Qanoil it does not matter where Venezuela exports their oil when, they quite literally, are unable to lift it in any quantifiable amount.

 

https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSKBN2427AC

VenezuelaAnalysis are a bunch of leftists who believe Chávez was a savior of the little man and Maduro is either his inept or corrupt unfortunate hand picked “Junior”.  These are the same people who will complain about some right-wing international action to overthrow the government without batting an eye without mentioning the coup attempt led by Chavez himself.  China lost in Venezuela, they would do well to learn from it.

 

[Qanoil + 116]

@waltz  Venezuela is a Socialist Paradise.

Venezuela is Socialism done correctly.

Please feel free to prove me wrong.

Edited August 2, 2020 by Qanoil

[waltz + 140]

5 minutes ago, Qanoil said:

@waltz  Venezuela is a Socialist Paradise.

Venezuela is Socialism done correctly.

Please feel free to prove me wrong.

Any country who is losing doctors, teachers and engineers has a problem.  Any country who’s population is declining through emigration, because of the inept policies of the government has major problems.  
 

Try reading Hausmann not Weibrot and Sachs.  But thanks for letting me know where you stand.