EghtesadOnline: Foreign natural entities are allowed to place an order for crude oil offered in Iran Energy Exchange (IRENEX), a move to facilitate foreigners’ participation in Iran’s energy market.
According to an official with National Iranian Oil Company, in the past, only foreign legal entities were allowed to place an order for purchasing Iran’s crude oil.
Amirhossein Tebyanian, NIOC’s representative in charge of offering petroleum products on IRENEX, said the decision was made following requests from foreign natural entities, IRIB News Agency reported.
Tebyanian added that all natural entities of countries having ties with Iran would be eligible to purchase crude oil from Iran’s energy bourse, Financial Tribune reported.
“All the formalities, including the confidentiality of buyers, would be observed for foreigners as is done for domestic customers,” he said, adding that foreigners have to receive trading codes to be able to trade on IRENEX.
Noting that there is no limitation on foreigners’ involvement in trading crude oil on IRENEX, Tebyanian emphasized that to receive the trading code, they need to apply in person to Securities and Exchange Organization, or send their duly authorized representatives there.
The oil official also announced that SEO has already received several applications from both foreign legal and natural entities to get the trading codes.
NIOC’s representative noted that the company offers heavy and light crude oil as well natural gas condensate on a weekly basis, as per the Oil Ministry’s directive.
Based on the Oil Ministry’s rules, the minimum purchase order was reduced from the previous 35,000 barrels to 1,000 barrels for land delivery, while the same previous figure is the minimum allowed for sea delivery.
Offering crude oil on IRENEX is part of government efforts to involve the private sector and international companies in oil transactions, which has long been under government control.
The role of the private sector in oil exports has gained traction, particularly after the reimposition of US sanctions which, among other things, has hit the oil industry hard, aiming to paralyze the economy.
The initiative to offer crude oil to private buyers started in October 2018 when NIOC offered 1 million barrels of light crude oil on IRENEX for the first time.
Oil was offered in consignments of 35,000 barrels each and NIOC sold overall 8 cargos (280,000 barrels) at the rate of $74.85 per barrel. The second round was staged two weeks later with the trading of 700,000 barrels.
Except for the initial enthusiasm for the new commodity in its early offerings, most of the subsequent oil offers have fallen flat with rarely any customer coming forward.
On November 4, the US President Donald Trump officially announced that he was pulling out of the Iran nuclear agreement, formally known also as the Joint Comprehensive Plan of Action.
The move apparently overshadowed oil sale on IRENEX, as the energy market was barely able to find customer for the offered crude oil since then.
NIOC has so far sold a total of 1.1 million barrels of crude via IRENEX.
According to NIOC’s website, at the next oil sale on July 9, 2 million barrels of Iran heavy crude will be offered at a base price of $57.66 a barrel.