Europe oil buyers return to Tehran to talk business

* Total (NYSE: TOT - news) , Eni (NYSE: E - news) , Saras (Frankfurt: S7A.F - news) among those to meet oil officials in

Tehran

* Iran hopes to reclaim European oil market by end of 2014

* Plans further meetings in Istanbul, London

By Ron Bousso and Peg Mackey

LONDON, Jan 23 (Reuters) - Major European oil buyers are

queuing up to meet Iranian officials as they jostle to

re-establish a strong position with Tehran in anticipation of a

full lifting of Western sanctions.

Even as the United States and its Western allies try to hold

the line to maintain tough sanctions, executives from European

oil firms - among them France's Total, Italy's Eni (Frankfurt: 897791 - news)

and independent refiner Saras - have visited Tehran in

recent weeks, industry sources say, for talks with the National

Iranian Oil Co (NIOC).

Tehran is confident that a thaw in relations with the West

has opened a door to revive suspended oil trade with Europe as

early as the end of this year, sources directly involved in the

talks said.

"Everybody is preparing for serious negotiations with Iran,

pending the removal of sanctions," a senior Iranian oil official

told Reuters. "We've already had lots of interest from our

traditional customers in Europe."

Western oil men are unanimous in viewing contact with Iran

as preliminary and stress that they would do nothing in breach

of the existing sanctions regime.

"The best way for companies like us to go back to Iran is

to follow strictly the sanctions and push both parties to reach

an agreement which will lead to the lifting of sanctions one

day," Eni Chief Executive Paolo Scaroni told reporters in Davos

on Thursday.

In November, Iran and the West agreed to a six-month deal in

which Tehran promised to scale back its nuclear programme in

exchange for the suspension of some western economic sanctions.

The sides began implementing the deal on Monday with hopes

that it will pave the way for a broad settlement of a decade-old

standoff. The accord stopped short of ending the embargo on

European imports of Iranian oil.

But that has not stopped Iranian and European oil executives

from starting to talk.

"The Iranians are eager to export and they believe it might

be possible by the end of this year, provided sanctions are

lifted," said a senior Western oil executive, after returning

from Tehran.

A team from Italian refinery Saras travelled to Tehran in

December at the invitation of NIOC, a source familiar with the

matter said.

A spokesman from Saras declined to comment and one from

Total did likewise, adding that the company continued to respect

the embargo. Eni also declined comment.

"The Iranians are optimistic and think things can progress

quickly," said an industry source, recently in Tehran.

"But that is wishful thinking on their side... They are

acting as if it is a matter of days or weeks before they can

start selling us crude again."

Before the West tightened sanctions on Iran in mid-2012, the

OPEC member supplied more than 700,000 barrels per day (bpd) -

nearly a third of its overall sales - to the European Union plus

Turkey. The remainder was bound for Asia.

RE-CONNECTING

Since then, Iran's oil exports - restricted to Asia and

Turkey - have more than halved to just over one million bpd.

On top of the overtures in Tehran, Iran also plans to hold

meetings with long-standing European customers in Istanbul,

Turkey and London within the next several weeks.

"I suspect it won't lead to anything real. They want to send

optimistic signals and try to put prospective customers on the

spot," an industry source who has been invited to Istanbul said.

Iranian oil officials are also expected to make an

appearance at the global oil industry gathering in London next

month, International Petroleum Week, after keeping a low profile

since sanctions started.

Although a full lifting of sanctions is not expected in the

short term, Iran is preparing the ground for a return to the

European market. Buyers, on their part, expect competitive

pricing when it does.

The halting of Iranian crude imports together with reduced

output from Iraq and Libya have weighed heavily on European

refining profits.

"The Iranians are testing the water: they're doing market

scouting, which is normal," said a senior European oil

executive.

"We still can't import a single drop of Iranian oil, but it

doesn't hurt to show a willingness to keep ties."

The table below shows the Iranian crude oil imported by

companies in Europe, including Turkey, prior to the 2012

European oil embargo.

Figures in '000s of bpd are based on industry and Reuters

estimates.

Customer Country Volume '11

Tupras Turkey 200

Total France 100

Shell UK/NL 100

Hellenic Greece 80

Cepsa Spain 70

Motor Oil Greece 60

Repsol Spain 30

ERG Italy 30

Iplom Italy 30

ENI Italy 20

Saras Italy 20

Total 740