Iranian private sector halts crude oil exports; a troublesome broker

Oil&Gas Materials 6 March 2013 18:12 (UTC +04:00)

Although the Oil Ministery, the Central Bank, and the private sector had come to terms on exporting 20 percent of Iran's export-bound crude oil via private enterprise, reports show that after passing 8 months of the trilateral agreemet, not only the goals of the agreement have not been realized, but also the private sector has not exported crude oil for the past two months.

On Tuesday, the Mehr News Agency quoted the chairman of the union of Iranian exporters of oil derivatives, Hassan Khosrojerdi as saying that specific policies of some banks and the National Iranian Oil Company, as well, have led to the stop of exporting crude oil by the private sector. According to him, the National Iranian Oil Company does by no means agree to provide the private sector with crude oil on credit.

Concurrent with imposing sanctions on Iran's oil sector and the central bank by the EU and the U.S., Iran announced that it will transfer 20 percent of crude oil exports to the private sector to counter the sanctions.

In the early July 2012, the Central Bank and the Oil Ministry signed an agreement with the union of Iranian exporters of oil derivatives, aimed to export 400,000-500,000 barrels of crude oil per day. Based on the agreemnet, the private sector should have exported up to 90 million barrels of oil to date.

However, Khosrojerdi has told the Mehr News Agency that just two million barrels of crude oil have been exported by the private sector duirng the mentioned period of time.
The head of the union of Iranian exporters of oil derivatives stated that the banking system has not supported the private sector at all, adding that domestic banks do not issue LCs for the private sector to export crude oil.

Meanwhile, the National Iranian Oil Company's Managing Director Ahmad Qalebani said on February 6 that buying and selling crude oil are coupled with problems. He referred to depositing money to the Central Bank's account overseas as one of the problems facing the private sector. Procuirng oil tankers and dealing with insurance and banking issues are the other problems, he noted.

On July 20, 2012, Reuters reported that Iran has stored up to 7 million barrels of crude oil at Egypt's Sidi Kerir Port and was ready to sell it at huge discount prices. According to Reuters, the sellers were unkown Iranian private companies.

Iran had announced that a consortium, which was comprised of 65 reputable Iranian private companies would handle 20 percent of crude oil exports. But, the Mehr News Agency quoted Khosrojerdi as saying that selling crude oil to a broker overseas has created difficulties for the trusted private sector, and that the National Iranian Oil Company and the banking system are not in accordance with each other.

Although Khosrojerdi did not refer to the name of the broker, but Khabaronline's website on February 10 asked the NIOC's Qalebani that a person named Babak Zanjani is reported to be the broker who sold Iranian oil. In response, Qalebani said that selling oil to Babak Zanjani has nothing to do with us. He added that the private sector received 320-330 orders for selling crude oil, but it exported just two consignmnets.

Meanwhile, on February 11, the Iranian Oil Industry website quoted Oil Ministry officials as saying that the parliament's energy committee had questioned Oil Minister Rostam Qasemi for delivering oil to Babak Zanjani.

According to the report, the energy committee of the parliament, chaired by Masoud Mirkazemi, has started investigating the sale of oil to Babak Zanjani, who has reportedly not deposited tens of millions of petrodollars to the Central Bank account. according to Iranian media, Babak Zanjani has established a bank in Malaysia with just millions of dollars of capital and has been busy brokering Iranian oil.