Chinese is funding Iran

A network of Chinese oil refineries is funding Iran

Simone McCarthy

A few hundred miles from where Chinese leader Xi Jinping will roll out the red carpet for President Donald Trump this week, a shadowy ecosystem has long been at work pumping billions of dollars into Iran’s economy – now helping keep Tehran afloat in defiance of the US.

These are the ports, pipelines, and oil refineries of Shandong province and its borderlands, where the hulking architecture of oil storage tanks and spindly profiles of smokestacks jut up from barren, coastal flatlands.

Here, so-called “teapot refineries” – small, independent oil companies that operate with the permission of Beijing – quietly process US-sanctioned Iranian crude into gas, diesel and petrochemicals for the world’s second largest economy.

Now, as Washington looks to cut Tehran’s financial lifelines and force it to capitulate to end the war, these activities are being yanked out of the margins and onto the negotiating table between Trump and Xi.

Tensions around this trade are deepening – playing out against a backdrop in which Beijing seeks stability in its relationship with the US, but also holds close economic and diplomatic ties with Iran.

The industry in Shandong province cropped up decades ago to feed off the Shengli oilfields in the Yellow River delta, but now they import heavily from overseas – processing roughly a fifth of the oil China consumes.

And the source of those imports? Often sanctioned crude, analysts say.

China doesn’t acknowledge importing Iranian crude in its customs data, and the origins of the imported oil has already been obscured upstream. But Beijing also rejects what it calls “unilateral” US sanctions and has ordered companies not to comply with Washington’s sanctions on refineries.