Member of Iran’s ICCIMA: IRENEX’s rules impede private sector’s active participation in trade
Baku, Azerbaijan, Aug. 5
By Elnur Baghishov - Trend:
The rules and regulations of Iran’s energy exchange (IRENEX) bar the representatives of the private sector from actively participating in trade at the energy exchange, member of the energy committee of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) Reza Padidar told in a statement published on the chamber's website, Trend reports.
According to him, a minimum of 35,000 barrels of crude oil are required to be purchased at IRENEX, while companies operating Iranian oil tankers transporting purchased oil cargo from ports exporting Iranian oil set a minimum of 700,000 barrels for their services.
"However, there are no conditions in place enabling customers to export and transport 35,000 barrels of oil," he said.
Padidar added that customers are therefore left with no choice but to increase the volumes of their crude oil purchases by 20 times. For example, if one is to suppose that the price of 1 barrel of oil sold on the energy exchange is $60, then private sector customers should spend at least $42 million for a minimum of 700,000 barrels of crude oil, according to him.
"This amount simply cannot be afforded by Iran's private sector during the hard times Iran’s economy is currently going through," he said.
As for solving the problems faced by the economy with regards to the sale of crude oil at IRENEX, Padidar said that the National Iranian Oil Company (NIOC) should select reliable exporters and provide them with resources based on financial and legal regulations, in order to enable them to purchase high volumes of oil at the energy exchange.
Padidar also considered the use of alternative trading methods for allowing small-scale customers to be involved in trade at IRENEX as being a viable solution.
Commenting on Iranian crude oil having so far failed to sell at the energy exchange over the current Iranian year (started March 21, 2019), Padidar reminded that the US imposed new sanctions on Iran in November 2018. However, in his words, the sale of crude oil at the energy exchange could have served as a good alternative to direct oil sales conducted by the NIOC during the period of sanctions, had it not been for the restrictions caused by IRENEX’s rules and regulations.
Iran began putting crude oil and gas condensates up for sale at the energy exchange on October 28, 2018, but has so far managed to sell only 1.085 million barrels of crude oil at the exchange.