TNAG-0935-FCO40-1154-Relations-between-Hong-Kong-and-Iran-1980 — Page 79

CONFIDENTIAL #P.A

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12.5

Introduction

HONG KONG AND IRAN

The purpose of this memorandum is to give Members some 135 background information on the economic relationship between Hong Kong

and Iran.

2

The main aspect of the economic relationship between Hong Kong and Iran is Iran's role as a supplier of oil to Hong Kong. There are other features: Iran as a trading partner for both goods and services and Iran's investment in Hong Kong. These are all described in more detail below.

A

G.S. 166

Iran as an Oil Supplier to Hong Kong

3

In 1978, Iran supplied less than 6% of Hong Kong's total intake of fuel oils, both by quantity and by value. It was the fourth largest supplier, following Singapore (which supplied over 75% of Hong Kong's total imports both by quantity and by value), Bahrain (9%), and China (6.5%). In 1979 Iran increased its share of Hong Kong's market to 8. 1% in terms of quantity and 10.4% in terms of value, and became the third largest supplier following Singapore and China. Although it was third in position, statistics show that it has now become as important an oil supplier to Hong Kong as China (which in 1979 supplied only 13,000 metric tons of fuel oils or 4% more than Iran). The position is shown in detail in the table annexed. Fuel oil is the only oil product which Hong Kong obtains from Iran.

4

Since Singapore is by far Hong Kong's major supplier of fuel oils, an assessment has been made of the importance of Iran as a crude oil supplier to Singapore. Statistics show that in 1978 Singapore imported from Iran 11% of its total intake of crude oil but the percentage dropped to 1.8% during the first half of 1979. Relevant to this is that Iranian exports are now 1 million barrels a day compared with 5 million in 1978. Half of the present exports go to Japan with the remainder being spread throughout the world.

5

The Shell Company of Hong Kong as the importer responsible for bringing in the largest proportion of Hong Kong's oil supplies has been informally consulted on the effect of Iran placing an embargo on Hong Kong

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