Kazakhstan to resume oil swap with Iran

An oil delegation of Kazakhs visited Iranian northern oil terminal in Caspian Sea in a bid to resume a strategic crude oil swap scheme that was abandoned more than five years ago.

The announcement was made by Hamid Reza Shahdoust at the National Iranian Oil Organization where he added that the delegations comprised of Kazakh oil experts and trade officials who toured the infrastructures developed in the Iranian port of Neka.

According to Shahdoust, the terminal has a daily capacity of restoring 120,000 barrels of crude oil which can be expanded to 200,000 barrels and if connected to the pipelines it increases to 500,000 barrels.

The official reassured that currently three 6,000-ton oil tankers will be able to anchor simultaneously in the terminal.

Under oil swap agreements, which started in 1997 and were in place for over 12 years, Iran received the crude oil of Azerbaijan, Kazakhstan and Turkmenistan in its northern port of Neka on the Caspian coast. The oil would be used in the country’s northern refineries.

Iran would then deliver an equal volume to the clients of the same countries – that themselves have no access to open waters – in its Persian Gulf terminals. Tehran would receive a transit fee from Caspian states over this. The overall revenue obtained by Iran from 1997 to 2009 has been estimated at about $880 million.

The government of Iran’s former president Mahmoud Ahmadinejad (2005-2013) suspended the Caspian swap scheme in 2009 on grounds that the country was not making money because receipts from the swap - about 1 USD per barrel - had not increased in line with spiraling oil prices.

Nevertheless, Iran’s current Minister of Petroleum Bijan Namdar Zangeneh recently said that Iran is determined to resume the Caspian oil swap scheme. Also, Mahmoud Astaneh, the Managing Director of Naftiran Intertrade Company (NICO), had told reporters that Tehran had started talks with Switzerland’s Vitol which had voiced interest in returning to the swap project.

Apart from Vitol, Germany's Select Energy Trading GmbH, UAE’s Dragon Oil, and the Ireland-based Caspian Oil Development were also involved in the Caspian oil swap scheme.