Iran's energy sector review

Iranian president's famous slang words during the presidential elections in 2005 were fighting against monopoly, corruption and putting petrodollars on people's tables. He claimed as having a list of "a major corruption list" in his pocket and has repeated this claim several times so far without revealing any report or submitting the list to the Judiciary System. Now, after seven and a half years under his two term presidency, Ahmadinejad said during a live interview on state TV on Dec.22, that 60 per cent of the country's financial assets are in the hands of 300 people, who got a huge amount in loans from banks and deny paying off their debts because they enjoy "hidden hands of support". Now, Iran's Prosecutor General Gholamhossein Mohseni Ejei said on Tuesday that the Judiciary System has three times requested from Ahmadinejad the list of those who have above 10 billion rials in value delayed loads to the banks, but Ahmadinejad hasn'

Last week Iran's gas consumption rose to 480mcm/d and according to the head of Iran's National Gas Company Javad Owji, it's predicted that the country's daily gas consumption will rise to 580 to 600 mcm in the winter months. Iran has consumed 90bcm of natural gas (averaging 246mcm/d) during the first eight hot months of the current solar year which began on March 20, including a 36bcm housing gas consumption which equals 156mcm/p. According to BP's annual statistics, Iran's gas production (excluding flared and recycled gas) in 2011 was 153.3bcm (some 420 mcm/d), while the consumption volume was 151.8bcm in 2011, indicating a 1.5bcm negative balance. Iran's yearly gas consumption growth for the next 10 years is estimated at nine to 11 per cent. Iran has to compensate this negative balance with importing gas from Turkmenistan, at least several billion cubic meters more than its 10bcm yearly gas export commitment to Turkey based on a contract signed i

My article for Azernews News Paper http://www.azernews.az/oil_and_gas/47652.html Iran's Economy Minister Shamseddin Hosseini confirmed that Iran's oil export revenues have halved. In 2011 Iran exported about 2.2 million barrels per day (mbpd) of crude oil and 400,000 bpd of condensate, worth $114.7 billion, which made up 84 percent of the country's total exports. After oil and condensate, petrochemicals and petroleum products are the major export goods in Iran. For instance, the country sold $3.5 billion worth of liquid petroleum gas (LPG) last year. LPG comprises propane and butane. Last solar year, Iran exported $2.06 billion worth of propane, and $1.3 billion worth of butane, according to Iran's Customs Organization, but new figures show that Iran's total propane export during the first eight months of theIranian solar year (starts on March 20, 2012) is $900 million, and butane disappeared from Iran's first five non-oil export items list. The m

Iran's Minister of Economic Affairs and Finance Shamseddin Hosseini finally revealed that Iran's oil export revenues have halted and customs taxes incomes decreased. Hosseini said government income for the current solar year was expected to reach $117 billion (based on the official USD rate in Iran), but mostly because of halting oil exports the figure may stand at $77 billion, giving a $40 billion deficit. The price of a barrel crude oil was considered at $85 in the current year's budget law and it's predicted that Iran would export 2.2mbpd crude oil, but the IEA says Iran's oil export volume decreased by one million barrels. The oil price was averaging about $110 per barrel during current year meaning Iran should have made $88 billion crude oil and about $20 condensate exports in 2012. Hosseini's statement shows that Iran's oil export volume has dropped even further than the IEA forecast which predicted a 40 per cent drop in Iran's oil export

OPEC members agreed to keep a 30mbpd crude oil output ceiling during the 152nd ministerial meeting on Wednesday. The 30mbpd quota was approved in December 2011, whilst the previous quota was 24.8mbpd, but neither last nor current quotas have been kept. For instance, during the Libya revolution, Saudi Arabia used its spare oil production capacity and the OPEC output increased to above 26mbpd (excepting Iraq), or during this summer 12 members increased oil output altogether to about 32mbpd, when the U.S and EU were preparing to put their oil sanctions on Iran into force. Iraq, which had suffered with long term sanctions during Saddam Hussein's presidency and experienced a war, has increased its oil crude production by one million barrels during the past three years. According to OPEC's latest monthly report published on Tuesday, Iraq's oil output reached 3.174mbpd, 509, 000 barrels above last year's output. Baghdad aims at a 3.7 million barrels oil production

Iranian President Mahmoud Ahmadinejad has run the executive branch of the country for seven and a half years and will be in the post for another six months. He has carried out large economic surgeries. Some believe that he has conducted surgeries without anesthetising the ailing economy by using force and threat, but some others say however, the economy was obliged to suffer the pain. The implementation of the subsidy reform plan and the liberalisation of the currency market have been realised mostly during the current year. After the Islamic Revolution's victory in 1979, the Iranian economy mostly experienced an inflation rate of above 10 per cent, but thanks to the injection of petrodollars into the economy, the devaluation of the rial against the dollar has not been at the same level with the inflation rate. During the past year, the rial lost 100 per cent of its value against dollar. In other words, due to intensified sanctions and the fall in Forex incomes, mainta

The Iranian government is preparing the next solar year budget to submit to the Parliament, but reportedly with significant difference from current year budget in details. Iran is expected to sell $ 81 billion oil, condensate and gas during current solar year, according to the budget law, which shares 17.5 percent of $461 billion-budget (based on official USD rate in Iran, 1226 rials, and also considered $85 per barrel). The current state budget relies $53 billion worth income on petroleum, but according to Iranian president's deputy on budget issues Rahim Mambini, the administration wants to decrease budgets' dependence on oil by 30 to 40 percent in next year. Earlier, the head of budget commission in the Parliament Gholam-Reza Mesbahi Moghaddam said that the government aimed to consider 1 million barrels drop in oil export in next year budget bill. Some 1 million barrels per day decrease in oil export means losing $40 billion oil incomes in a year. How can Ira

Head of the Iran's National Development Fund Mohammad Reza Farzin said the reserves of Fund have increased by $7.895 billion during first seven months (March 19 to Oct.21) and reached $42.862 billion. According to the law, 23 per cent of petroleum exports, alongside some of the surplus oil export's revenues should be transferred to the National Development Fund (NDF). NDF was established two years ago to transform oil and gas revenues into productive investments and private industry sector for future generations. According to Farzin's statement, 20 per cent of Iran's oil, gas and condensate export revenues in last solar year and 23 per cent in the current year have transferred to the fund. According to Iran's budget laws, the oil price for the last and current years have been considered respectively at $80 and $85 per barrel, while the real prices in the oil markets have been at $107.19 in 2011 and $110.5 during this year, then Iran has earned huge amount of surp

After a warning of Iranian Parliament Speaker Ali Larijani during his visit to Turkey on Nov.27 about dispatching NATO's Patriot defensive missiles near Turkey's border with Syria, some Iranian army generals threatened the western neighbour about the consequences of establishing Patriots. Turkey has more than 900 km length border with Syria which has been challenged by an internal war for about two years. Last month some Syrian bombs fell on Turkey's villages on the border and left several injured and dead. This is what Turkey has argued as to the reason of establishing defensive systems in the border area with Syria. However, senior advisor to the Supreme Leader Ayatollah Ali Khamenei's representative in Iran's Revolutionary Guard Corps (IRGC) Brigadier General Yadollah Javani said on Nov.27 that "Turkey will suffer much detriment from establishing patriots in their territory". The Syrian government is Iran's major ally and Tehran attemp

After a huge decrease in smuggled fuel from Iran in 2011 because of cutting offered subsides in this field, fuel smuggling revived again during last few months due to the fall in the national currency's value. The Iranian government cut a part of fuel subsides in late 2010, raising prices significantly which led to a decrease in fuel smuggling from 10 million litres in 2008 to three million litres per day in early 2011, according to official statistics. However, after the drop of the rial's value versus the USD during the past few months by above 40 per cent when fuel prices remained unchanged, caused a revival in smuggling. Deputy oil minister Alireza Zeyqami said on Nov.25 that some six million litres of diesel is being smuggled from Iran each day. Gasoline smuggling has risen to two million litres per day during the past few months as well. There are several reasons. First, because of difference between the fuel price in Iran and its neighbours, for instance th

Iran's parliament has rejected a government supported bill on Nov.20, which was concerned about bartering $1 billion worth of crude oil with the required tar for construction contractors. Notwithstanding that parliament had not ratified oil-tar bartering, according to Mehr News Agency, the Iranian government started illegally bartering crude oil with tar two months ago. According to the aforementioned bill, the government would provide refineries with crude oil free of charge and then they supply bitumen production units free of charge with their raw materials through processing the crude oil. Bitumen producers would deliver their products free of charge to the Ministry of Roads and Urban Development in order to be handed over to contractors as payment of government's debts. The Iranian government that has reportedly been faced with a huge amount of budget deficit, decided to deliver its assets to contractors instead of paying off its debts through using cash. Ira

Iran's vehicle manufacturers are faced with both rising production costs and lacking some details as to how to manufacture cars after the giant international auto companies left Iran because of sanctions aimed to curb the country's disputed nuclear programme. These include Italian Fiat, German General Motors and its French partner PSA Peugeot Citroen, South Korean Hyundai and the Japanese Toyota Motor Corporation, etc. Iran's auto production decreased 66 per cent in September 2012 compared to September 2011, while the country's total auto production dropped by 42 per cent in the first half of current Iranian solar year, started on March 19, compared to the same period in 2011. On the other hand, Iran's major car producer Iran Khodro which had been a partner of France's Peugeot since 1989, had to close some production units and it raised its production prices by 10 per cent last month, while Iran's other major automaker Saypa increased its car pric

Among the silence of Turkmen officials' position, Iranian Petroleum Minister Rostam Qasemi announced that Turkmenistan has suspended supplying gas to Iran. This is second time during past five years that Turkmenistan cuts gas supplies to Iran in a cold season, while this country reduced gas export to Iran last winter by 10 mcm per day. The head of the Iranian National Gas Company Javad Owji said last month that Turkmenistan's gas exports to Iran has reduced by 52 per cent in the current year compared to last year, while now this country supplies only 4 to 5 mcm of gas per day to Iran. Turkmenistan is obligated to support Iran with 14 bcm of gas per year (nearly 40 mcm per day) through two pipelines: the Korpeje-Kordkuy route which was commissioned in 1996, and the Dauletabad-Sarakhs-Khangiran pipeline which came on stream in 2010. The total capacity of pipelines is about 20 bcm per year. Turkmenistan has enough gas Turkmenistan's natural gas production volume

Iran has announced that imports of computer and related components are allowed for import again, several days after the prices on these goods jumped up by 5 times, as a result of administration's decision to ban imports of some luxury goods, including clothing, cell phones, and computer parts. Iran has been grappling with the problems of decreasing oil exports by one million barrels, and accepting Euro and Dollar for selling oil after U.S. and the EU enforced a new round of sanctions as of June 28 and July 1, aiming to cut the Islamic Republic's oil revenues. In March, Iranian Finance and Economic Affairs Minister Shamseddin Hosseini announced the country's foreign exchange reserves at $100 billion. This is while the International Monetary Fund estimated that Iran's forex reserves fell to $70-80 billion last year. Meanwhile, the administration has said that $18 billion of the reserves are the hands of people. Although the amount of Iran's forex reserve

The Chairman of Tehran's Chamber of Commerce, Industries, Mines and Agriculture (TCCIMA) Yahya Al-e Eshagh announced on Tuesday that tax revenues will replace oil crude export incomes in next year's budget. Iran's solar year starts on 20 March. Before, Iran's Oil and Economy ministers talked about a similar plan, saying that for compensating the drop in oil export incomes because of sanctions, reforming the taxes laws and increasing taxes revenues are an option. According to current yearly budget, tax income shares seven percent of Iran's GDP, with $27.7 billion worth. The Iranian Parliament ratified the crude oil export volume at 2.740 mbpd (including 340,000 barrels of condensates) at $85 per each barrel of crude oil. In total according to budget, the oil export revenue for the current solar year is expected to be $72.598 billion. Iran's current yearly budget amounts at $462 billion based on the official USD rate in Iran. On the other hand, accor

Iranian government is planning to pre-sell crude oil to citizens, aimed to attract investment for oil industry sector, which long been suffering from lack of liquidity. Ahmad Ghalebani, head of National Iranian Oil Company told Shana on Sunday the government in planning to issue Oil Sukuk (an Islamic type of bond) in the form of "forward contract" to attract the assets of citizens for investing in the oil industry sector. Forward contract is a contract that specifies the price and quantity of an asset to be delivered in the future. "According to this plan, Iran wants to pre-sell crude oil to people in the form of bonds," he said. Just 12 month ago, Iranian government announced its plan to establish crude pre-selling to people, and Oil Minister Rostam Qasemi said that $15 billion worth Sukuks have been permitted to be issued by Iran Securities and Exchange Organization. However, this plan didn't work out. Qasemi had said that issuing oil Sukuks me