International Petroleum Investment Company (Ipic) has reportedly promised to compensate Spain for any shortfalls in oil supply arising from the embargo on Iran.
The Abu Dhabi-owned company, which owns Cepsa, Spain's largest oil refiner, is seeking to calm fears among consumers that a phase-out of Iranian crude from European markets might aggravate the economic woes of Europe's Mediterranean nations.
Khadem Al Qubaisi, Ipic's managing director, made the offer during a visit to Madrid last week, according to the Spanish newspaper Expansion, which cited people familiar with the matter.
"Ipic's promise to guarantee oil supplies to Spain when the Iranian import ban starts has greatly eased the concerns of the Spanish government," the newspaper said in an editorial.
The pledge came after diplomatic moves by the Spanish government, it added."The ones being most sensitive to it right now are the Mediterranean refineries," said Christopher Bake, the managing director at the Vitol Group in Dubai.
While Ipic is owned by the Abu Dhabi Government, the company does not produce any crude oil of its own and would be reliant on Abu Dhabi National Oil Company (Adnoc) or the international markets to source crude supplies. Ipic took full control of Cepsa in a €4 billion (Dh19.32bn) deal last year.
The offer of secure supplies was probably intended to placate fears of any disruption after Iranian officials predicted a spike in oil prices because of the European embargo, one analyst said.
Ipic did not respond to requests for comment.
EU members last month agreed on a ban of Iranian crude after it refused to abandon its nuclear programme, which western powers suspect is an effort to develop atomic weapons.
The embargo will be come into effect in July, giving recipients of Iranian crude time to find alternative supplies, after several European countries including Spain raised concerns over the economic impact of an oil shortage.
European imports of Iranian crude have declined in recent years, although 18 per cent of Iranian exports ended up in the bloc last year, according to the International Energy Agency (IEA). Spain received 14 per cent of its crude from Iran last year, said the IEA.
But the EU sovereign debt crisis has pushed many European economies back towards recession, and there is widespread concern that a disruption of crude supplies could make things worse. Spain, Italy and Greece are among the hardest hit by the crisis.
Iran has played on those fears by threatening to halt exports to some European countries before the embargo comes into effect, and before these countries have secured alternative sources of oil.
Analysts dismiss such threats as unlikely, and point out that diminishing demand as a consequence of the downturn lessens the immediate need for Iranian crude.
"We are beginning to see data that shows that several European countries are entering recession, and European refiners are going bust. In the last IEA report demand has been sharply downgraded in the first quarter," said Bill Farren-Price, an energy analyst at PPI.
The European embargo followed a new round of sanctions by the US, which has targeted the payment mechanism for Iranian exports, and any company entering transactions with Iran's central bank will be barred from the US financial system.
Combined with diplomatic pressure, this fifth round of sanctions, effective from January 1, has persuaded Asian consumers of Iranian crude to seek alternative supplies.
JX Holdings, Japan's biggest refiner, is in talks the UAE, Saudi Arabia and African producers to replace crude oil imports from Iran, a company executive said on Friday.
Asia is Iran's biggest export market, and experts predict China will benefit from the EU embargo by buying Iranian crude at a discount.