Sanctions against Iran could help country to modernize economy: Western analyst
Azerbaijan, Baku, Jan. 5 / Trend A.Badalova /
Sanctions imposed on Iran could help the country to modernize its economy, the Energy Department Director at the Italian Liberal Research Center Bruno Leoni, Carlo Stagnaro.
"The sanctions could help Iran to achieve some sort of modernization of its own economic environment, but by creating an incentive to increase the refining capacity and by providing the government with a pretext to alleviate, and eventually remove, the existing subsidies to domestic fuel consumption," Stagnaro wrote Trend in an e-mail.
Earlier the House of Representatives has approved a bill to impose new sanctions on Iran to halt Iran's nuclear development by majority vote. The measure initiated by Obama, suggests a ban on doing business in the U.S. on all foreign companies supplying oil products to Iran. The sanctions will come into force after approval by the U.S. Senate. This measure extends the law, under which any company investing in Iran's energy sector over $20 million will be punished.
Iran is one of the world's largest oil exporters. However, the country should import up to 40 percent of the total domestic fuel demand in connection with the weakness of the country's processing industry. The state grants subsidies, which constrain the country's petrol prices. Since mid-December to the end of March, Iran needs to import about two million tons of gasoline and about 810,000 tons of diesel fuel.
U.S. Energy Security Analysis (ESAI) Oil Markets Department Head Rick Mueller believes Iran will not be able to build new processing capacity in the country in the near future, as Iran claimed.
"Iran has announced an ambitious schedule to build new refinery capacity in the country, but it remains starved of both financing and technological expertise to build these new facilities," Mueller wrote Trend in an e-mail. "It's highly doubtful that any new capacity will be available soon."
In November, China's Sinopec and the National Iranian Oil Refining Company (NIORDC) signed a memorandum of understanding, with Chinese investment worth $ 6.5 billion in construction of oil refineries in Iran. Investments will be spent to construct seven refineries with total capacity of processing 1.56 million barrels per day. Their commissioning is expected to increase processing capacity of Iran to 3.2 million barrels per day.
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