Iran in talks with Turkmenistan, Kazakhstan over oil swap

Iran in talks with Turkmenistan, Kazakhstan over oil swap

Tehran, Iran, May 7

By Milad Fashtami - Trend:

Iran says it is ready to start oil swaps with neighboring countries.

Ali Majedi said that the country is currently negotiating with Kazakhstan, Iran's IRNA News Agency reported on May 7.

Deputy oil minister added that Turkmenistan has also declared its readiness to continue oil swaps with Iran.

Iranian Oil Minister Bijan Namdar Zanganeh said on March 1 that he is not aware of any new swap deals with neighboring countries, Iran's ISNA News Agency reported.

However, he went on to note that he has ordered the ministry officials' to continue oil swaps under certain conditions.

Deputy Oil Minister Mansour Mo'azzami had previously told ISNA that Iran has lost its old swap markets.

"Iran's previous administration did not fulfill its obligations, so the costumers canceled the oil swap contracts and turned to other countries in order to meet their demands," he explained.

According to ISNA, Iran's oil swaps have been halted for over three years, because the oil minister at the time believed it would turn Iran into an oil-importing country.

However, under the U.S.-led sanctions against Iran's oil industry, oil swaps could play a vital role for Iran's economy.

Hassan Khosrojerdi, head of Iran Oil Products Exporters Union, said on April 18 that Iranian government is not in favor of oil swaps at present because it is not economically justified for the country, Iran's Fars News Agency reported.

"Since oil prices in the Caspian Sea and Persian Gulf regions are different, oil swaps are not profitable for all companies," he said.

"An oil swap can only be economically justified if the two sides swap products, based on the value of cargoes," he explained.

"We have suggested this idea to the government, but the administration has yet to answer," he said.

Managing Director of the National Iranian Oil Refining & Distribution Company, Abbas Kazemi, told SHANA News Agency on Jan. 3 that Iran plans to increase oil product swaps with its neighbors to prevent fuel smuggling.

He went on to say that Iran is interested in increasing its swaps with Afghanistan and Pakistan.

Oil and oil product swap deals with neighboring countries were repeatedly suspended during the administration of ex-President Mahmoud Ahmadinejad (2005-2013).

Early in June, Mehr News Agency quoted former Director of the National Iranian Oil Company Ahmad Qalebani as saying Iran currently has the capacity to swap 500,000 barrels of oil each day.

The country also plans to swap one million barrels of oil in the near future he added.

"Unfortunately, to date the country is not using its oil swap capacity at all," Qalebani explained.

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