Iranian private sector’s failed oil export mission

Iran Materials 6 March 2013 13:15 (UTC +04:00)

Azerbaijan, Baku, Mar. 6 / Trend /

Dalga Khatinoglu, Trend's Iran News Service Chief

Although the Oil Ministry, the Central Bank and the private sector had come to terms with exporting 20 per cent of Iran's export-bound crude oil by the private sector in July, reports show that after passing only eight months of the trilateral agreement, not only the goals of the agreement have not been realised, but also the private sector has cut exports of crude oil during 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 also the National Iranian Oil Company, have led to a stop in the export of 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 per cent of its crude oil exports to the private sector to counter sanctions.

In early July 2012, the Central Bank and the Oil Ministry signed an agreement with the union of Iranian exporters of oil derivatives, aimed at exporting 400,000 to 500,000 barrels of crude oil per day by the private sector.

The private sector should have exported up to 90 million barrels of oil to date. However, Khosrojerdi told the Mehr News Agency that just two million barrels of crude oil has been exported by the private sector during the aforementioned period.

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, National Iranian Oil Company Managing Director Ahmad Qalebani said on February 6 that buying and selling crude oil are coupled with problems. He referred to depositing money in the Central Bank's account overseas as one of the problems facing the private sector. Procuring 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 seven million barrels of crude oil at Egypt's Sidi Kerir Port and was ready to sell it at huge discounted prices. According to Reuters, the sellers were unknown Iranian private companies.

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

Although Khosrojerdi did not refer to the name of the broker, the Khabaronline 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 him. He added that the private sector received 320-330 orders for selling crude oil, but it exported just two consignments.

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 over delivering oil to Babak Zanjani.

According to the report, the parliamentary energy committee chaired by Masoud Mirkazemi, has started investigating the issue of selling 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 millions of dollars of capital and been busy brokering Iranian oil.