US tells China not to exploit sanctions on Iran
By Christian Oliver in Seoul

Published: August 2 2010 13:55 | Last updated: August 2 2010 18:37

Washington has told China to stop taking advantage of the UN sanctions regime against Iran by seizing opportunities left by departing European companies.

China last month condemned moves by the European Union to ratchet up sanctions against Tehran’s nuclear programme by hitting transport, energy and finance. Iran is the third biggest oil supplier to China, and Beijing is investing heavily in the Islamic republic’s energy fields and refineries.

“We want China to be a responsible stakeholder in the international system and that means co-operating with UN Security Council resolutions,” Robert Einhorn, US special adviser for non-proliferation and arms control, said on Monday on a trip to Seoul. “It means not backfilling, not taking advantage of the responsible self-restraint of other countries.”

Mr Einhorn conceded China had a “large and genuine” need for energy security, but said a priority of his visit to Beijing later this month would be to persuade the country to pull out of Iran because of sanctions.

“One concern that a number of countries expressed when approached to take measures against Iran is that ‘if we practise restraint, China will fill in behind, China will take advantage of our restraint’,” Mr Einhorn told reporters in Seoul.

China is already a crucial partner for Iran as European companies have quit major projects, particularly the massive South Pars gas field beneath the waters of the Gulf. Royal Dutch Shell, Repsol, OMV and Total had pursued projects there but the only foreign investor remaining is China National Petroleum Corporation.

The South Pars gas field had been particularly prized because of the lucrative potential of converting it into liquefied natural gas. Foreign oil companies say they were ultimately deterred from investing not only by sanctions but also by poor contractual terms and the purging of technocrats from Iran’s state energy companies.

The US has targeted gasoline imports as Tehran’s Achilles heel. While western companies have cut off their exports to Iran, Beijing not only ships petrol to Iran but is also committed to help expand refinery capacity. Iran is the second biggest crude oil producer in the Opec oil cartel but it lacks refinery capacity. Hossein Noghrehkar, a deputy oil minister, said last week that Chinese investment in the energy sector totalled $40bn and that Tehran and Beijing were considering constructing seven refineries.

http://www.ft.com/cms/s/0/0253d046-9e28-11df-b377-00144feab49a.html