Iran to stop swap of oil products with Caspian Sea states

Business Materials 14 March 2015 15:03 (UTC +04:00)

Baku, Azerbaijan, Mar. 14

By Fatih Karimov - Trend:

Iran will stop swap of oil products with Caspian Sea states as of the next Iranian fiscal year, which begins on March 21.

Iran stopped crude oil swap five years ago, and will stop swap of oil products from the CIS, the Caucasus, and Iraq, Iran's Mehr news agency reported on March 14.

For the time being, Iran imports fuel oil, diesel, and liquefied gas from the Caspian Sea states to provide fuel for a number of power plants in the northern parts of the country. But, swap of oil products will stop next year as the country has boosted production of natural gas to replace liquid fuel as feedstock in power plants.

Meanwhile, Hossein Aghayan, an official with the National Iranian Oil Products Distribution Company, said that the company is ready to export 41 million liters of fuel oil and 15 million liters of diesel per day in the next year.

Iran had swapped a part of the Caspian littoral states' oil from 1997 to 2009 for 12 years, but stopped it due to transit fee disputes.

Iran had deals with 16 companies including Select Energy Trading, Dragon Oil of the UAE, Vitol of Switzerland, and Caspian Oil Development of Ireland, to swap crude oil from Kazakhstan and Turkmenistan for $1.1 transit fee per a barrel, but the operations were halted when Iran demanded $5.5/barrel transit fee.

During a 12-year period Iran earned $880 million from oil swap operations.

Iran needs oil swap with northern neighbors, because Iran's southern regions share almost the total of the country's oil production. The distance between the country's southern regions with north provinces is about 1800 km and transferring crude oil to refineries in Tehran and Tabriz cities costs a lot.