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Spain’s Repsol says Iranian crude easy to replace

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Further countries agreeing with oil embargo on Iranian regime
Further countries agreeing with oil embargo on Iranian regime

Reuters, Moscow, 20 Dec 2011 -  Spanish refiner Repsol sees no problem finding alternative crude oil supplies for its Spanish plants if Europe follows through on a threat to ban imports of Iranian crude, its chairman said on Tuesday.

“For us it is not very difficult to move from Iran to Saudi Arabia to even Russia. It depends on the quality of the crude and the needs of our system,” Chairman Antonio Brufau told reporters in Moscow, where he signed a deal to form a joint venture with mid-sized Moscow-based producer Alliance Oil .

European Union Energy Commissioner Guenther Oettinger has said EU countries agree on a need to exclude Iranian crude from Europe as part of a response to a U.N. watchdog’s report suggesting Iran has worked to design an atom bomb.

But diplomats have said the loss of Iranian crude could take a heavy toll on refiners in Greece, Italy and Spain. Spain, which imported about 10 percent of its crude from Iran in the second quarter of 2011, is the least dependent of the three.

Brufau said that if the rules on Iranian crude imports were to change, Repsol, which operates 896,000 barrels per day of refinery capacity in its home country, would swap out Iranian crude for the best available barrels at the time.

Brufau said the crude mix was constantly changing in the process of optimising the refineries.

“Every week we decide the quantity of crude we import from other countries, then depending on the market, the spreads, et cetera, we decide buying from one place to another,” Brufau said.

Refiners in Europe are already paying a high price for disruptions and threats to their crude supplies this year, first from the loss of Libyan barrels in the uprising that toppled Muammar Gaddafi’s regime, then sanctions against Syria and increasing pressure on Iran.

Russia’s Urals crude, Europe’s most stable import stream, has seen a record run against benchmark Brent as it commands a premium from refiners, who have spent billions upgrading their refineries to take advantage of the usual discount on Urals.

Repsol’s Cartagena refinery is one of the latest to undergo such upgrades.

Iran’s oil minister has said Saudi Arabia would not step in with extra supplies in case of additional sanctions on Tehran’s oil industry, but Brufau said that was not a problem for Repsol.

There are, he said, “plenty of places, Latin America is one place, Africa, Nigeria is there, Russia as I said before, depending on the needs we have day by day.”

The joint venture, 51 percent held by Stockholm-listed Alliance Oil and 49 percent by Repsol, will pool $840 million of assets in Russia that hold an estimated 171.5 million barrels and currently produce 20,500 barrels per day.

Brufau said the deal was not aimed at supplying the refineries.

“We will produce here, and we will buy crude from the market, from Russia.”

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