Oil offering at IRENEX facing challenges, but will definitely continue

TEHRAN, Oct. 06 (MNA) – The national budget law for the current Iranian calendar year (started on March 21) obliges the Oil Ministry to offer at least two million barrels of light crude oil, two million barrels of heavy crude oil and two million barrels of gas condensate at the international ring of Iran Energy Exchange (IRENEX) every month.

Offering crude oil and gas condensate at IRENEX is to materialize the objectives of “Resistance Economy” for diversifying methods of selling these products and benefitting from the capabilities of private sector for exporting them.

National Iranian Oil Company (NIOC) offered light crude oil at IRENEX first on October 28, 2018, just few days before new U.S. sanctions on Iran’s petroleum sector took effect (November 4).

Offering gas condensate at IRENEX came after the successful offering of crude oil at this market. And then the turn came to heavy crude. Offering heavy crude at IRENEX came after NIOC offered light crude at this stock market in eight round. 

Now, after nearly one year, the released reports show that sales of these products has not been so successful and welcomed, as according to the representative of NIOC at IRENEX, just about one million barrels of light crude and 70,000 barrels of heavy crude have been sold at IRENEX since the second Iranian calendar month of Ordibehesht (began on April 21), although the products have been regularly offered at IRENEX on a weekly basis.

IRENEX Managing Director Seyed Ali Hosseini believes that policymaking and execution are not integrated; and it is the reason behind the slow trend of the trades.

In an interview conducted by IRNA last week, the official said that in every activity, when these two are integrated, the result will be successful.

Replying to a question that why crude oil offering is not welcomed at IRENEX, Hosseini said, “The task should be precisely monitored and the existing barriers should be investigated, but we have some weakness in this due.”

Another reason for not successful offering of crude oil at stock market is lack of necessary infrastructure at this market.

There are such barriers, but the experts say that they should not stop the process of offering.

Barriers exist, but offering should not be stopped

Ali Bakhtiar, a member of Iranian parliament’s energy committee, has said, “It is true that selling crude oil at IRENEX has not been successful, but it is not a reason to stop this right measure.”

“Offering crude oil at stock market is a necessity under the current condition, so that through it we can compensate for the fall in our oil sales at the global markets at the time of sanctions. We should resolve the problems as soon as possible in a way that in the near future we can enjoy a reliable planning for selling oil at IRENEX”, the official commented.

Referring to some of the challenges in the way of offering oil at stock exchange as those related to the shipment, and also limitations for money transfer and insurance because of the sanctions, he said, “These challenges should be removed through cooperation among IRENEX, Oil Ministry, Central Bank of Iran (CBI), and Majlis [Iranian parliament], so that our stock market could be like that of the modern countries, a ground for the big deals of crude oil and oil products.”

Experiences to be used for offering oil products

Meanwhile, as the country has also started offering oil products such as gasoline at IRENEX, the experts believe that the results of offering crude oil at the stock market should be used as experiences for avoiding the weaknesses.

In early August, National Iranian Oil Products Distribution Company (NIOPDC) offered 18,000 tons of 95 octane gasoline produced in Iran’s Persian Gulf Star Refinery (PGSR) at IRENEX, of which 5,000 tons were sold to be exported to Afghanistan, Armenia, and Iraqi Kurdistan.

The latest data released about sales of oil products at IRENEX indicate that National Iranian Oil Company has sold 450,000 tons of oil products worth $160.656 million at the international ring of Iran Energy Exchange during the week ended on September 20.

In the mentioned week, 168,000 tons of gasoline worth $64.297 million as well as 162,500 tons of gasoil worth $73.964 million along with 20,000 tons of kerosene and 50,000 tons of liquefied petroleum gas were sold to foreign buyers at IRENEX.

Not the good time to start

Bakhtiar besides a number of other experts also say that offering crude oil at stock market should have been started some years ago, and because of the sanctions, last year was not a proper time to begin this initiative.

Mohammad-Ali Khatibi, a former representative of Iran in OPEC, said, “It was not a proper time; offering crude oil at stock market is a new measure being slowed down also by the sanctions condition.”

But he is of the opinion that if different parts of the private sector set up a consortium in this field they will be stronger to tackle the challenges.

As previously mentioned, despite all the barriers and challenges, the country is determined to continue offering crude oil and oil products at the stock market.

In a press conference hosted by Mehr news agency at the place of the agency in early July, NIOC’s representative in IRENEX said that the company will continue offering oil at IRENEX.

“Offering oil and gas condensate in the international ring of IRENEX has become a legal obligation, and it will definitely be a lasting move,” Amir-Hossein Tebyanian said.

Briefing the press about the procedures and processes of NIOC’s oil and gas condensate offerings at IRENEX, the official noted that physical sales of oil at IRENEX is just the first step and the main goal is to activate other financial instruments, and offer Iranian crude in the regional stock markets.

“We will continue offering oil at IRENEX in order to institutionalize the necessary procedures which are a prerequisite for improving IRENEX to the level of world class stock exchanges.” he said.

Meanwhile, on May 21, Iranian Oil Minister Bijan Namdar Zanganeh said National Iranian Oil Company will continue the process of offering crude oil at Iran Energy Exchange.

Back in February, the minister had also said that it may take some time for selling crude oil at IRENEX to be common and regular, but the oil ministry will offer the product at this market every week.

MNA/TT

News Code 150892

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