France seeks tougher EU sanctions against Iran

BRUSSELS/DUBAI/SINGAPORE (AFP/Reuters) - France on Monday urged its European Union partners to prepare new sanctions against Iran, saying they were now required due to Tehrans intransigence over its nuclear programme.
The Europeans have to prepare the sanctions process, European Affairs Minister Pierre Lellouche told reporters after a meeting with his EU counterparts in Brussels.
He said sanctions were needed because of Irans refusal of all offers of a solution made by the West. We have been in talks for six years, Lellouche sighed. All the Wests proposals have been rejected and now if we listen to the Iranian spokesman they are reaching 20 percent enrichment of uranium in Iran, which is the threshold to militarisation, he added.
We hope Europeans will work together on preparing the sanctions, he underlined.
Three sets of United Nations Security Council sanctions have already been imposed on Iran over its refusal to suspend uranium enrichment, which lies at the heart of international fears about the nature of its nuclear programme.
The EU 3+3 Britain, China, France, Germany, Russia and the United States met in New York earlier this month but failed to reach an agreement about new sanctions.
Europe and the West are concerned about Tehrans rejection of a UN-brokered deal under which most of Irans low enriched uranium (LEU) stockpile would be shipped abroad to be further enriched into reactor fuel.
Tehran ignored a US-set December 31 deadline to accept that offer, drawn up by the UN International Atomic Energy Agency, and countered with its own proposal of a simultaneous and staged swap of LEU with reactor fuel.
Europe and Washington fear that Iran is secretly developing fissile material for nuclear weapons under the cover of its uranium enrichment programme.
But oil-rich Iran insists its nuclear programme is peaceful and solely geared toward generating electricity for its civilian population.
Nevertheless Lellouche accepted that without UN sanctions, which involve getting China and Russia on board, there would be no unilateral measures from Europe.
If there is no agreement in the UN Security Council there wont be any sanctions, he stressed.
Not all EU nations are keen on the idea of going ahead now with preparations for further sanctions against Tehran.
The sanction instrument is a very blunt one so it should be used with extreme care. Our aim is to get the Iranians to the negotiating table and have a political solution, said Swedish Foreign Minister Carl Bildt.
EU foreign policy chief Catherine Ashton was also in no hurry.
We just have to wait and see what comes out of the discussions of the Security Council, she told a press conference after presiding over the EU ministerial talks in Brussels.
Meanwhile, Iran has secured a deal to export about 19,000 barrels per day (bpd) of diesel to Iraq this year, industry sources said on Monday.
The deal shows Iran is confident it can not only sidestep the threat of US sanctions against suppliers of fuel for its own use, it can even act as a trader by selling fuel to its neighbour.
The contract would begin in January, sources said, unseasonable for Iranian diesel exports.
The Islamic Republics exports typically take place in the period of slower domestic power demand from April through the summer. The deal would run through the rest of the year, the sources added.
We have a long-term contract (with Iraq)...this is over and above our exports during the spring season which stays within the Persian Gulf, a source familiar with the deal said, declining to provide more details.
Traders said the deal could be worth anything between $500 million and $600 million.
Iran cut its diesel consumption sharply last year, when increased domestic natural gas production allowed it to substitute natural gas in power generation and burn less diesel.
Iran imported between 600,000 to 900,000 barrels of diesel monthly between September through December in 2009, traders said. In December, Iran purchased around 2 million barrels of diesel from Singapore trader Hin Leong.
Tehran had originally not allocated funds for diesel imports in its budget for the year ending March 21, 2010, forecasting it would meet local requirements due to higher gas production.
But the OPEC member had to resume imports in September due to disruptions in piped gas supply into the country.
In 2010 Iran expects up to 1 billion cubic feet per day (cfd) come online from the third phase of the giant South Pars gas field, being developed by Norways StatoilHydro.
The country should have some incremental flows from South Pars to feed condensate splitters which may be substituting for diesel (gas oil) in some uses, said Jamie Webster, a senior consultant at PFC Energy.
This may free up some diesel for export.
Iran, the worlds fifth-largest oil exporter, lacks the refining capacity to meet domestic fuel consumption and relies heavily on imports from international markets to plug the gap.
Iran was likely to source part of the fuel needed to service the diesel supply contract with Iraq from international markets.
The Iranians are smart, they are going to make some money off this deal, a Middle East based trader said.
They will buy from Hin Leong or other traders looking to offload the oil from storage and then sell that into Iraq and make a bit of money.
Imports are a sensitive subject for Iran as they are a potential target for the United States for sanctions aimed at halting Tehrans nuclear programme.
The diesel Iraq is importing was expected to be used in power stations, traders said. Utilities in Iraq can take diesel with a sulphur content of up to one percent, they said.
They can do anything in that range...most of this will go to burn in the power stations, Iraq is not very stringent on the specs they buy, a trader said.
Diesel produced from the countrys petrochemical plants, also known as heavy ends, could be another source for exports.
We see more production of heavy ends which is a high sulphur grade of diesel makeup, this can also be part of the supply mix being exported to Iraq, a Middle East-based trader said.
The fuel will be delivered by trucks and coastal tankers, sources said.
Years of war in Iraq has ravaged its ability to produce enough fuels like gasoline and diesel to meet growing domestic requirements forcing it to buy on the international spot market.
Traders said it was hard to estimate how much diesel Iraq imports, due to a lack of transparency and because of smuggling.