Iran sold 12 million barrels of heavy, high sulphur crude from its Soroush and Nowrouz Gulf oil field over the past two months, Mahmoud Baharvand, head of import and export co-ordination at the Iranian Offshore Oil Company, told an Iranian newspaper.
Stocks of the unwanted oil, which has a high sulphur content and low gasoline yield, had been building for months. Industry experts had estimated Iran was storing around 20 million barrels - a quarter of the world's daily demand - on tankers.
Shell in Tehran was not immediately available to discuss the purchase and Shell in Europe declined comment. The Indian refiner that normally buys Iranian crude is Reliance Industries Ltd Hojjatollah Ghanimifard, executive director of international affairs at the National Iranian Oil Company, told Reuters Iran had sold almost half the crude stored in Gulf tankers and that it expected to sell the rest by the end of August.
He was unable to say how much this amounted to. Baharvand said 15 million barrels of heavy crude from the Soroush and Nowrouz fields had struggled to find a market.
"Twelve million barrels of Soroush and Nowrouz oil that was stored on eight tankers plus Sourena (another tanker) has been supplied to the market inside and outside of Iran in the last two months," he told the Jahan-e Eqtesad daily. "India and Shell, that was the main contractor for the development of these fields, were the main customers," he added.
He continued that the unsold three million barrels still on tankers were for emergency usage, but did not explain. Oil traders in the Mediterranean said Iran must have offered the crude at a discount as refining margins for heavy, sour crude are poor. The crude is difficult to convert into transport fuels, much in demand during the summer driving season.
"The quality of this crude is very bad," said one trader. "I imagine they must have sold it at a big discount (to sweet crude benchmarks) to move so much of it." August Brent futures are trading at a premium to September futures, so sellers will earn more for prompt sales than if they store the crude and ship it later.
Since 2004, prompt futures have been at a discount to later futures, encouraging sellers to keep the oil and sell at a higher price later. Shell's development of Soroush and Nowrouz was plagued by technical problems and was often delayed before it was taken back by the Iranian government. Its capacity is 190,000 barrels per day.