Baku, Azerbaijan, Feb.2
By Elnur Baghishov, Leman Zeynalova – Trend:
Iranian foreign policy has become hostage to successful development of energy fields, Iranian economy expert Mehrdad Emadi told Trend.
He pointed out that Iranian National Oil Company intends to pursue its capacity enhancement program in spite of the U.S. unilaterally imposed sanctions. “Stated targets for the West Karoun oil fields, South Pars phases 15-19 and the Yadavaran fields all indicate a growing ambition to increase production levels by at least 65 percent over the next five to six years.”
Emadi believes that the production targets reflect both an anxiety on the Iranian side because of the unequal extraction from the oil and gas fields shared jointly with its neighbours especially Iraq and Qatar as well as the rising budget deficits of the government and the escalating expenditures of the country abroad especially in Syria, Lebanon and the Persian Gulf conflicts.
“In this context the success of the Iranian foreign policy has become hostage to the successful development of the energy fields and the sale from their output. By starting an oil and gas spot market through which crude and gas and later petrochemical derivatives could be sold to domestic and foreign private buyers, Tehran hopes to circumvent the U.S. sanctions on the sector,” noted the expert.
He went on to add that whilst the energy bourse of Tehran offered its first crude consignment intended for export so far the uptake has been lukewarm and uneven. “Apart from the U.S. sanctions, the start of similar offerings for future deliveries in the bourses of the Arab countries of the Persian Gulf on more favourable terms lowered the appeal of the Iranian bourse.”
The low level of foreign participation reflects the risk premium Tehran has to absorb if the bourse is to attract foreign buyers on a regular basis, Emadi concluded.
In an attempt to sell oil to the Iranian private sector, the National Iranian Oil Company (NIOC) has started large scale offering of crude oil with a million barrels at the Iran Energy Exchange (IRENEX).
In order to develop alternative channels for monetizing Iran’s oil under the US sanctions, Iranian authorities have activated an old plan to market some of their export potential through the IRENEX.
The IRENEX was established in 2012 as a regulated exchange for trading of energy-related products and securities.
Up until that IRENEX had mainly been an exchange for the trading of petroleum and petrochemical products (not crude oil), gas liquids and electricity.