Azerbaijan, Baku, Aug.9 / Trend, T. Konyayeva /
Iran's proposal to establish a forum of countries exporting petrochemical products (Petrochemical Exporting Countries Forum (PECF)) is unfounded, experts say.
"This idea is groundless fantasy of the Iranian regime, which seeks more reasons to demonstrate that it has influence in the world," Paul Sullivan, professor at the Homeland Security University told Trend by e-mail.
Last week, Iran's Deputy Oil Minister Abdul-Hussein Bayat said that the Petrochemical Exporting Countries Forum, establishment of which is initiated by Iran, can include countries such as Russia, Turkey, Saudi Arabia, Qatar and United Arab Emirates.
The draft of the Forum is prepared by the National Petrochemical Industries Company and submitted in the form of proposals to the country's Spiritual Leader's office. The main purpose of the forum is to discuss the financial and technical sides of various issues in the petrochemical sphere, their assessment, selection of the production policy, production technologies.
According to Sullivan, Iran is still obliged to import most of gasoline for providing transport with fuel, and it has serious difficulties in meeting its needs in petrochemical products.
This organization will not likely be created if the Iranians are behind the idea, and, consequently, will have little impact on petrochemical markets, Sullivan says.
"Cartels with such a wide range of political and other purposes, as a rule, cannot reach most of their goals," he said.
In addition, according to the American expert, creating a group in the sphere of petrochemical products in addition to OPEC, can lead to weakening of OPEC.
The Organization of the Petroleum Exporting Countries (OPEC) is an international intergovernmental organization (also called a cartel), established by oil-producing powers in order to stabilize oil prices. OPEC includes 12 countries: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Libya, United Arab Emirates, Algeria, Nigeria, Ecuador and Angola. The Organization's headquarters is located in Vienna. In 2008, Russia declared its willingness to become a permanent observer in the cartel.
"Some OPEC members may not like it. It will be also difficult for the new group to persuade Saudi Arabia, UAE, and all others who have serious problems with the Iranians, to join it," Sullivan noted.
Regarding Russia and Turkey, according to him, it will not quite comfortable even for the Russian, given the fact that they didn't join OPEC. He also noted that Turkey is not a leading country for the petrochemical products production.
"This merger will further irritate the U.S. and EU, and they may perceive in it an opportunity to reduce their chances of achieving certain goals set towards these and other countries," Sullivan said.
Expert considers this idea meaningless due to the fact that even OPEC is not a powerful cartel.
"It [OPEC] has had little impact in periods of oil prices growth in recent years," Sullivan noted. "Its influence usually and especially recently was expressed only in some degree on controlling the rate of decline in these prices," he said.
Sullivan said a large share of the authority to determine the oil price fell to the financial markets, speculators. Political events have also proved that they have a great influence in determining prices, rather than OPEC.
Iranian-born British analyst Reza Taghizadeh also believes that the idea of creating such a cartel is not the real one.
"Iran is seeking to demonstrate a relation with the outside world and use the model for the regulation and control over part of their industries, Taghizadeh, professor at the University of Glasgow said by e-mail. "They are outdated models and they cannot serve to achieve any goals in the new world economy," he added.
According to Taghizadeh, there is no need for the creation of new cartels, trusts and associations in the modern world and in the term of free market economy.
"The new world economy is based mainly on the association of the private sector and competition between companies," Taghizadeh said.
He also pointed out that countries exporting petrochemical products not necessarily control the local companies producing or exporting it.
"Moreover, the local petrochemical companies in Turkey, Saudi Arabia and Qatar operate either on a license of major international companies or international companies directly invest in them. That's why these countries don't join the forum initiated by Iran," Taghizadeh said.
According to the Iranian expert, petrochemical industry mainly exists in the industrialized countries and not necessarily in the oil and industrialized countries producing countries.
"Share of the developing countries such as Russia and Iran, in the petrochemical industry, compared to industrialized countries, is very insignificant. In addition, kind of their products are different," Taghizadeh said.
Iran produces from 15 to 23 million tons of petrochemical products per year (one of the leading figures in the Middle East). The structure of products cover very simple and cheap polymers, whereas in Saudi Arabia produce more sophisticated and far more expensive products.
"Therefore, these markets are mixed," Taghizadeh said. "They can only try to control the prices of raw materials (natural gas), and for this reason they must challenge their government, as oil and gas sector is mostly under the state control in the country."
Professor in the Department of Economics at Northeastern University, Kamran Dadkhah, agrees with the previous experts agree. Dadkhah believes this proposal (to establish a forum), like many other initiatives emanating from Iran, is of more propagandistic character.
Dadkhah said the production of petroleum products is rapidly developing in the Middle East, and Iran's share in this process is significant. However, the main producers are still in the United States and Western Europe.
"Thus, if the forum's goal is to coordinate the activities of exporters and maintenance of technical cooperation, why the membership is limited to Iran, Saudi Arabia, UAE, Russia, Qatar and Turkey," Why not have a broad international forum? "he said.
Dadkhah believes even if all of the named countries accept the invitation, as well as the structure of the forum, this will not be followed by anything other than expensive bureaucracy to Iran and debate without any real results - for the international oil market.
"Given the share of these countries in the production and the difference of their interests, a forum, even if it is formed, will not affect the international prices of petrochemical products," he said.
In contrast to the Western experts, Former Chief Adviser of the Central Bank of Iran Bijan Bidabad is optimistic about the possibility of establishing a forum.
"Maybe at the moment creation of such a forum in Iran does not have the appropriate conditions, but in the end, this forum will be established," Bidabad told Trend by telephone from Tehran.
Earlier the same countries conducted extensive negotiations for the creation of "Gas OPEC", which was created in the end, he said.
"All member countries of the forum are the producers of petrochemical products and have large reserves of oil and gas. Therefore, the need to establish such a forum increases," Bidabad said. "The success of this forum is guaranteed from this point of view."
He believes creating such a forum will affect the petrochemical market.
"Despite the fact that the member-countries of the Forum have large gas reserves, we should not forget that there are countries such as the U.S., Indonesia and others," Bidabad said. "If the forum, similar to OPEC is created, it will have an impact, but not so significant."
T.Jafarov contributed to the article.