Home Contact Us  

China - Articles

Print Bookmark Email Facebook Subscribe
#3584, 29 February 2012
Iranian Embargo: China’s Options
Teshu Singh
Research Officer, IPCS
email: teshusinghdu@gmail.com

The West is tightening its efforts to impose an oil embargo on Iran. China is facing a dilemma over the present situation in Iran as its energy demands are enormous. China is Iran largest trading partner and it has invested heavily in Iranian oil fields. In 2011, Beijing and Tehran signed a deal that gave China exclusive rights to several Iranian oil and natural gas field till 2024. China’s Sinopec had signed a deal in 2007 to develop the huge Yadavaran oil field which the US tried to prevent. About forty per cent of China’s crude oil from Saudi Arabia, Iran and Oman are dependent on the Straits of Hormuz for the purposes of routing their energy exports. Interestingly, when the embargo was announced, the state-owned National Iranian Oil Company said that it “will replace European customers.” The suggestion may have been that the replacement could be China. In the light of this, will China join the embargo along with the US and EU against Iran from 1 July 2012?

China has voiced opposition to any further sanctions as well as the ban on the import of Iranian oil by the US and the EU. Iran has also warned that if the embargo is imposed it will block the Straits of Hormuz which is the only sea route for oil and gas exports from the Persian Gulf to other regions.

The success of the embargo will largely depend on China’s future actions. People’s Daily has stated that “Getting involved in sanctions against Iran would greatly undermine China’s economic, strategic and other interests.” China, for the last thirty years, has practiced what it describes as an independent foreign policy of peace, a hallmark of which is the principle of non-interference in the sovereign affairs of other nations. Having been the target of US sanctions, China believes that the proposed embargo lacks international legitimacy. It is therefore highly unlikely that China will join the embargo - the present state of affairs is therefore conducive to Chinese strategic interests.

Any development in the Straits of Hormuz will seriously affect China’s energy needs. As an alternative, China has begun to explore other foreign oil sources to ensure smooth supply and reduce its dependence on Iran. China is likely to maintain its present relations with Iran while at the same time trying to explore more sources of energy.

China’s roaring appetite for stable supply of oil and gas is pushing it towards the Gulf. China is pushing for the strategic Abu Dhabi Crude Oil Pipeline (ADCOP) also known as Habshan-Fujairah oil pipeline in the UAE. The 404 kilometre pipeline would connect Abu Dhabi’s Habshan oilfield to Fujairah port. Once it is operational it will be able to transport 1.5 million barrels of oil a day initially, and further expand to 2 million barrels a day. This particular pipeline will help China to ease any risks that would arise from the disruption of the Hormuz Strait. Once operational, the pipeline will lower dependency on oil terminals in the Gulf, increase export potential on the UAE’s eastern seaboard, and reduce shipping traffic in the Hormuz Strait. China has also entered a new phase of friendly cooperation with the UAE. This development can be seen as an effort by China to maintain a steady flow of oil.

Saudi Arabia has already been supplying an extra 200,000 barrels per day to China since November 2011. China is also seen as an ideal match for the Saudis, as China’s demand for oil is expected to grow in the near future.

These alternatives will give Beijing an advantage in renegotiating the price of Iranian crude oil since Iran’s international isolation will significantly weaken Iran’s negotiating position. China’s state-backed oil trading companies are likely to be the main beneficiaries of the Western embargo on Iranian oil exports. These companies would try to purchase Iranian oil at a cheaper rate at this moment and build-up its own oil reserves, especially when China wishes to expand its twenty day oil stocks to a hundred day strategic reserve.

China has taken a balanced stand on the Iran issue until now. Although it recognizes Iranian enrichment as long as it adheres to the guidelines of the IAEA, it has voted against Iran on its nuclear weapons programme. However, if China does not join the embargo, it will be seen as going against the US and EU. Today, with the US as China’s second largest export market after EU, China-US relations are as important as China-Iran relations. As a permanent member of UNSC, China is obliged to support global sanctions along with other major powers, and the present situation will undoubtedly test Chinese mettle as a responsible international power.

Print Bookmark Email Facebook Subscribe
IPCS Columnists
Af-Pak Diary
D Suba Chandran
Resetting Kabul-Islamabad Relations: Three Key Issues
Can Pakistan Reset its Relations with Afghanistan?
The New Afghanistan: Four Major Challenges for President Ghani
Big Picture
Prof Varun Sahni
Understanding Democracy and Diversity in J&K
When Xi Met Modi: Juxtaposing China and India
Pakistan?s Tactical Nuclear Weapons: The Inevitability of Instability

Dateline Colombo

Asanga Abeyagoonasekera.
Sri Lanka: Moving Towards a Higher Collective Outcome
The Importance of Electing the Best to our Nation's Parliament
Sri Lanka: Toward a Diaspora Re-Engagement Plan
Dateline Islamabad
Salma Malik
Pakistan's Hurt Locker: What Next?
IPCS Forecast: Pakistan in 2015
India-Pakistan Relations in 2015: Through a Looking Glass
Dhaka Discourse
Prof Delwar Hossain
IPCS Forecast: Bangladesh in 2015
18th SAARC Summit: A Perspective from Bangladesh
Bangladesh in Global Forums: Diplomacy vs. Domestic Politics
Eagle Eye
Prof Chintamani Mahapatra
India-US: Significance of the Second Modi-Obama Meet
Has President Obama Turned Lame Duck?
Modi-Obama Summit: Criticism for Criticism?s Sake?

East Asia Compass
Dr Sandip Mishra
India-Japan-US Trilateral: India?s Policy for the Indo-Pacific
China-South Korea Ties: Implications for the US Pivot to Asia
Many ?Pivots to Asia?: What Does It Mean For Regional Stability?
Himalayan Frontier
Pramod Jaiswal
Nepal?s New Constitution: Instrument towards Peace or Catalyst to Conflict?
IPCS Forecast: Nepal in 2015
Constitution-making: Will Nepal Miss its Second Deadline?

Prof Shankari Sundararaman
IPCS Forecast: Southeast Asia in 2015
Indonesia's Pacific Identity: What Jakarta Must Do in West Papua
Modi in Myanmar: From ?Look East? to ?Act East?
Sushant Sareen
IPCS Forecast: Pakistan in 2015
Islamic State: Prospects in Pakistan
Pakistan: The Futility of Internationalising Kashmir

Looking East
Wasbir Hussain
Myanmar in New Delhi's Naga Riddle
China: ?Peaceful? Display of Military Might
Naga Peace Accord: Need to Reserve Euphoria
Maritime Matters
Vijay Sakhuja
Indian Ocean: Modi on a Maritime Pilgrimage
Indian Ocean: Exploring Maritime Domain Awareness
IPCS Forecast: The Indian Ocean in 2015

Nuke Street
Amb Sheelkant Sharma
US-Russia and Global Nuclear Security: Under a Frosty Spell?
India's Nuclear Capable Cruise Missile: The Nirbhay Test
India-Australia Nuclear Agreement: Bespeaking of a New Age
Red Affairs
Bibhu Prasad
Countering Left Wing Extremism: Failures within Successes
Return of the Native: CPI-Maoist in Kerala
The Rising Civilian Costs of the State-Vs-Extremists Conflict

Regional Economy
Amita Batra
India and the APEC
IPCS Forecast: South Asian Regional Integration
South Asia: Rupee Regionalisation and Intra-regional Trade Enhancement
South Asian Dialectic
PR Chari
Resuming the Indo-Pak Dialogue: Evolving a New Focus
Defence Management in India: An Agenda for Parrikar
Pakistani Taliban and Al Qaeda in Afghanistan: Implications for Asian Security

Spotlight West Asia
Amb Ranjit Gupta
Prime Minister Modi Finally Begins His Interaction with West Asia*
A Potential Indian Role in West Asia?
US-GCC Summit: More Hype than Substance
Strategic Space
Manpreet Sethi
India-Russia Nuclear Vision Statement: See that it Delivers
Global Nuclear Disarmament: The Humanitarian Consequences Route
Nasr: Dangers of Pakistan's Short Range Ballistic Missile

The Strategist
Vice Admiral Vijay Shankar
Jihadi Aggression and Nuclear Deterrence
The Blight of Ambiguity
Falun Gong: The Fear Within

OTHER REGULAR contributors
Gurmeet Kanwal
Harun ur Rashid
N Manoharan
Wasbir Hussain
Rana Banerji
N Manoharan

Ruhee Neog
Teshu Singh
Aparupa Bhattacherjee
Roomana Hukil
Aparupa Bhattacherjee

Related Articles
Sitakanta Mishra,
"US, Iran and Israel: India in a Diplomatic Bind," 27 February 2012
Aryaman Bhatnagar,
"Iran’s American 'Problem' in Afghanistan," 14 February 2012
J Jeganaathan,
"India’s Iran Dilemma: Nuclear Fuel or Crude Oil?," 18 January 2012

Browse by Publications

Issue Briefs 
Special Reports 
Research Papers 
Seminar Reports 
Conference Reports 

Browse by Region/Countries

East Asia 
South Asia 
Southeast Asia 
US & South Asia 

Browse by Issues

India & the world  
Naxalite Violence 
Suicide Terrorism 
Peace & Conflict Database 
Article by same Author
A 'New Era' of Democracy in Taiwan: Implications for Regional Security & Economy

IPCS Forecast: China in 2015

Securing India's Interests in the Indian Ocean: New Strategies and Approaches

China and the Asian Infrastructure Investment Bank: A New Regional Order?

China's End Game in Hong Kong

Contemporary Foreign Policy of China: Legacy of Deng Xiaoping

BRICS: China’s End-Game

US-China Strategic and Economic Dialogue: Lessons for India

The Malabar Exercises: India, Japan and the US

China 2013: New Leadership

China and Air Defence Identification Zone (ADIZ): Political Objectives and International Responses

The Positives

China and Southeast Asia: What is the Strategy behind the Maritime Silk Road?

China and Myanmar: The Great Game of the Gas Pipeline

China and the US: Fifth Strategic and Economic Dialogue

Xi-Obama Summit

Quest for Energy Security

India and China: What did the Salman Khurshid and Li Keqiang Visits Achieve?

China: Engaging Nepal as a Land Port

China: Contextualising the Anti-Access Area-Denial Strategy

China and the Asia-Pacific: Trends, Challenges and Dilemmas

Second Sino- Indian Strategic Economic Dialogue: A SWOT Analysis

China: Reasons for being a Top FDI Destination

IPCS Discussion: Sino-Indian and Sino-South Korean Relations

IPCS Discussion: China's Role in North Korea's Stability and Regional Security

Y! MyWeb
Print Bookmark Email Facebook Subscribe
Year 2018
 2017  2016  2015  2014  2013  2012  2011  2010
 2009  2008  2007  2006  2005  2004  2003  2002
 2001  2000  1999  1998  1997

The Institute of Peace and Conflict Studies (IPCS) is the premier South Asian think tank which conducts independent research on and provides an in depth analysis of conventional and non-conventional issues related to national and South Asian security including nuclear issues, disarmament, non-proliferation, weapons of mass destruction, the war on terrorism, counter terrorism , strategies security sector reforms, and armed conflict and peace processes in the region.

For those in South Asia and elsewhere, the IPCS website provides a comprehensive analysis of the happenings within India with a special focus on Jammu and Kashmir and Naxalite Violence. Our research promotes greater understanding of India's foreign policy especially India-China relations, India's relations with SAARC countries and South East Asia.

Through close interaction with leading strategic thinkers, former members of the Indian Administrative Service, the Foreign Service and the three wings of the Armed Forces - the Indian Army, Indian Navy, and Indian Air Force, - the academic community as well as the media, the IPCS has contributed considerably to the strategic discourse in India.

Subscribe to Newswire | Site Map
18, Link Road, Jungpura Extension, New Delhi 110014, INDIA.

Tel: 91-11-4100-1902    Email: officemail@ipcs.org

© Copyright 2018, Institute of Peace and Conflict Studies.