Shanghai (Platts)--20Nov2013/1151 pm EST/451 GMT

State-owned National Iranian Oil Corp. expects to start negotiating new term contracts with Chinese state-owned buyers of Iranian crude oil next month, an NIOC official said Thursday.

Maziar Hojjati, managing director of NIOC's China office, said talks for 2014 term volumes would primarily focus on volumes.

"The price is not negotiable, it's just for volumes. We hope we can increase [for 2014], but it depends on their situation," Hojjati said on the sidelines of a conference in Shanghai.

NIOC prices its crudes destined to Asia on a monthly basis using an official selling price formula with an average of Platts Dubai and Oman assessments as the benchmark.

China is one of Iran's largest buyers of crude oil, with total imports over the first three quarters of this year at 16.01 million mt, up 1.4% year on year.

"By December we have to talk. We have started pre-negotiations, but we have to invite them [the Chinese] to come to Tehran to talk," Hojjati said.

He said there have already been some "high-level" discussions between Iran and the Chinese government and its state-owned companies, including Sinopec, whose trading subsidiary Unipec is one of the two buyers of term Iranian volumes. The other is state-owned trader Zhuhai Zhenrong.

Hojjati said payment for 2014 crude volumes will likely remain in euros, with a term of 60 days credit.

"We are flexible to receive RMB [renminbi currency] as well, it depends on the Chinese side," he said. "We do have an RMB account here, but so far the Chinese prefer to pay in euros."

Talks between Iran, the US and the European Union over Tehran's nuclear program started in October in Geneva, with the latest round of meetings happening this week. Iran has been the target of a series of economic sanctions but now wants the West to ease restrictions on its oil trade and banking.

--Song Yen Ling, yenling.song@platts.com
--Daniel Colover, daniel.colover@platts.com
--Edited by Meghan Gordon, meghan.gordon@platts.com

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