Asia's imports of crude from West Africa are at record highs as sanctions on Iran cut supplies from the Islamic Republic to China, a Reuters survey of West African oil flows suggest.
Asian imports of West African crude oil will hit an all-time high in the first quarter as purchases of Iranian oil decline and as Chinese and Indian refiners build stocks from alternative sources, trade and shipping sources said.
North American, Asia and European refiners compete to buy West Africa's high quality, low sulphur crude oil. Increasingly it is a favourite source of fuel for Chinese, Indian and other Asian refiners.
The region is a natural alternative source of oil for Asian buyers who wish to avoid sanctions imposed by the West over Iran's nuclear programme that the United States and its allies say aims to produce Iranian nuclear weapons.
Tehran denies it is planning an atomic bomb and says the programme is designed to meet domestic energy needs.
The Reuters survey shows West African oil imports by Asian countries will average 1.81 million barrels per day (bpd) in March, 1.8 million in February and 1.84 million in January.
This brings the average for the first quarter of 2012 to around 1.82 million bpd, up from a previous record of 1.79 million in the first quarter of 2011 and 2011's average 1.57 million.
Not all the crude oil cargoes due to load in March from Nigeria, Angola and other West African exporters are placed yet, and the totals could rise over the next few weeks, traders say.
Sources close to Chinese state-owned oil trading companies say imports of Angolan crude oil are up by as much as 20% in March from December and the increase largely reflects a decline in purchases of Iranian crude.
"HALF A DOZEN MORE"
"Chinese companies have taken half a dozen more cargoes in March and these are almost replacements for Iranian barrels," said one senior West African crude oil trader.
But trade and shipping sources are unsure whether the trend away from Iranian crude will continue into the second quarter.
Chinese companies are now negotiating hard on long-term purchase contracts with the state National Iranian Oil Company, and traders suggest the recent dip in imports by Chinese may be part of a strategy to force Iranian crude selling prices lower.
Industry sources close to the negotiations in Asia say China will halve its crude imports from Iran in March compared to average monthly purchases a year ago, as the dispute over payments and prices stretches into a third month.
Sinopec, through its trading arm Unipec, has already snapped up extra cargoes from Saudi Arabia, Iraq, Russia and Australia in addition to its higher imports from West Africa.
The refiner is likely to buy more crude from the spot market to cover March requirements, traders say.
Chinese buyers took 31 cargoes of West African crude, mostly from Angola, in March, compared with 30 cargoes in February.
Nigeria and Angola are Africa's two largest exporters, shipping as much as 3.5 million bpd to international markets.
Taiwanese buyers are also buying West African crude as an alternative to Iranian, traders say, and have so far bought around 14 million barrels of West African this year, up slightly from recent averages.
Japanese buyers have also imported cargoes of Angolan and Gabonese crudes for burning, trade sources said.