Iran's energy sector review

Just less than one month after winning the Iranian election, President-elect Hassan Rohani faced the most stringent new round of sanctions the U.S. has ever imposed against the country. The law signed in January as part of the annual national defence authorisation act, targets Iranian energy, shipping and shipbuilding sectors barring the sale, supply or transfer of 'significant' goods or services by non-U.S. companies and also Iran's national currency, rial, WSJ reported on July 1. Rohani, whose victory in election race was won with a 'moderate policy and eliminating the nuclear dispute' slogan, has been welcomed by both the Iranian opposition and international community, it is not clear how he would he realise Iranians hope for the elimination of sanctions and solving the economic problems? President Ahmadinejad's legacy for Rohani includes a 1.9 per cent economic contraction in 2012, over three million unemployed citizens, 40 per cent closed industry un...

Nearly two years ago on July 19, 2011, Iran's oil ministry website quoted deputy oil minister Hamdollah Mohammadnejad as saying that the country reached self-sufficiency in building onshore drilling rigs. At that time, Mohammadnejad said that five domestic companies were manufacturing onshore drilling rigs through reverse engineering and indigenizing the required technology. He also said that three domestically-made drilling rigs have been tested successfully and have been delivered to the oil ministry. In addition, a contract for building five other drilling rigs has been signed with domestic companies. Mohammadnejad went on to say that the domestically-made rigs were equal in quality with their European-made rivals, but noted that for the time being 85 percent of compressor parts and 50 percent of turbine parts are made inside the country. Now, Hedayatollah Khademi, the managing director of the North Drilling Company, which is a contractor for building the rigs, has said that he ...

Two weeks after Hassan Rohani's victory in the presidential election, the USD's exchange rate against Iran's national currency, the Rial, dropped by 20%, but rose by 10 percent during last two days again. Before Rohani's victory, the price of the dollar was about 36,500 Rials on June 14, which decreased to below 30, 000 Rials in ten days, but rose again to 32, 300 Rials on June 26. The Governor of Central Bank of Iran (CBI) Mahmoud Bahmani rejected rumors of an injection of a huge amount of USD into open markets to decrease the dollar's exchange rate by the CBI, while economist and former member of Parliament Ali Mazroui told Azernews that the CBI is unable to set the USD's rate in Iran and the main reason for increasing the rial's rate compared to USD is the sale of USD by people who holds the $18 billion in USD reserves because warning about falling the USD price in Iran After Rohani won. Mazroui says that after moderate Rohani who is looking to eli...

The Oil Ministry of Iran has announced that $46 billion had been spent in 3 years (March 2010-March 2013) to develop new 15 phases of the South Pars gas field (Phases 11 to 24), and $30 billion more is needed in the current Iranian calendar year, which began on March 21. According to official reports, Iran has spent $16 billion, $20 billion and $10 billion respectively during the past three solar years on the giant South Pars joint gas field with Qatar. The Iranian sector of the field holds about 14 trillion cubic meters of gas and its first inaugurated 10 phases are producing about 242 mcm of gas per day. Akbar Torkan, the former oil minister and the advisor to president-elect Hassan Rohani, says developing the gas field's 15 new phases (Phases 11 to 24) had been projected to cost less than $40 billion. In an interview with the Mehr News Agency on Monday, Torkan criticized the significant rise in the development costs, saying that $46 billion has been invested, but even a ...

The Iranian Customs Administration released a report, indicating that Iran's imports significantly fell in the first two months of the current Iranian calendar year (March 21-May 21), while exports declined by 1.8 percent. The 208-page report says imports fell by 32.47 percent to $5.692 billion, compared with the same period in the previous year, which amounted to $8.430 billion in imports. Non-oil exports (including condensates) were $445 million more than imports in the mentioned period. In other words, non-oil exports surpassed imports for the first time. First positive trade balance However, if gas condensates (kinds of light crude oil which are produced from gas fields) are omitted from non-oil exports, Iran's trade balance will be minus $794 million. Exports of gas condensates fell by 11 percent and reached $1.239 billion in the two-month period. Nine of ten most important Iranian exported goods were oil products, so that petrochemical exports hit $1.717 billio...

Hassan Rohani won a majority of votes in an election which was held completely democratic, at least in voting and counting processes. But, time will tell how he would deal with Ahmadinejad's legacy, including 32 percent inflation, 40 percent devaluation of the rial, 60 percent fall in oil exports, and 2 percent economic contraction just over the past year, as well as 3 million jobless, 4 rounds of sanctions by the UN and banking sanctions of the West, $600 billion of government debt to the banking system, and 40 percent closed down industrial units over the past eight years. He will rely on 72 percent people who participated in the election. On Friday, Iran's Supreme Leader said that he has just a single vote. He called electoral officials to observe transparency and faithfulness, which came true, so that none of the candidates cast a minor doubt over the results. The election's result was a lesson, not only for principlists, but also for the entire world, and that w...

The eight Iranian presidential candidates have unanimously criticized the current economic situation and President Ahmadinejad's administrative policies over the past eight years. They have claimed that they will pull the country out of runaway inflation, recession, unemployment, and currency devaluation. But, despite all the criticisms about Ahmadinejad's economic policies, the candidates have not yet given even general outlines of their economic programs. As the West intensifies sanctions against Iran, introducing outlook plans for restoring Iran's economy seems impossible. Although the sanctions have not changed the Ahmadinejad administration's approach, they have affected lives of a majority of Iranian people. Of course, there are pragmatic candidates who are optimistic about seeing positive results in the future. The legacy of Ahmadinejad's administration Saeed Jalili seems to be the flag bearer of the ruling system. The administration of President Ahm...