EghetsadOnline: The National Iranian Oil Company raised $700 million in revenues by selling oil and petroleum byproducts in the capital market in the past eight months, the managing director of the company said Tuesday.
“Now that we cannot get assistance from the National Development Fund of Iran (a sovereign wealth fund), revenue from selling oil derivatives on the Iran Energy Exchange is helping us finance some incomplete projects,” Masoud Karbasian said, ILNA reported.
The government is struggling to plug its budget deficit and cannot afford to pay for oil development projects and that is the reason why NIOC is looking at the available options (other than exports), he noted.
On the same subject he added that the private sector is of importance in attracting liquidity and assigning oil projects, according to Financial Tribune.
US sanctions on the oil, banking and shipping sectors announced in 2018 have significantly undermined NIOC’s foreign businesses, namely crude oil exports. Officials including head of the Planning and Budget Organization, Mohammad Baqer Nobakht and government spokesman Ali Rabiei have often said that that there is no money for oil-related projects.
“Switching to new revenue channels by offering crude, gasoline and diesel on the Iran Energy Exchange has had positive results but is not enough. Much more needs to be done to support private firms involved in and working for the oil industry.”
According to Karbasian, the revenue ($700 million) will be used to fund EPC (engineering, procurement and construction) and EPD (engineering, procurement and drilling) contracts. He did not elaborate.
Selling gasoline on the Iran Energy Exchange, which started last month, on average generates $200 million whenever it is offered, Ali Hosseini, the managing director of IRENEX, said last week, adding that the commodity is not sold in the energy market on a regular basis.
Karbasian said long-term plans call for generating funds for oil development projects via the capital market in addition to other possible ways, one of which is issuance of participatory bonds and Islamic bonds (Sukuk).
Role of Domestic Manufactures
Pointing to the ability of domestic oil equipment manufacturers, he said the NIOC has recognized 100 items as essential for the oil and gas industry, 80 of which have been indigenized and the rest, including a complete range of downhole equipment including workover rig, well-pulling machine, special vehicles and shallow-sea workover barges, will also be manufactured by Iranian companies.
On plans to manufacture 10 categories of high-demand equipment for the oil sector, he said contracts have been signed with Iranian research centers like Jahad University Institute of Khuzestan, Shahid Chamran University of Ahvaz and Behsazan Jonoub Company to manufacture items such as polycrystalline diamond compact (PDC) bits, sucker rod pumps (SRP) and wellhead equipment -- components for oil or gas wells that provide structural and pressure-containing interface for drilling and production devices.
According to Reza Padidar, a former head of the Society of Iranian Petroleum Industries Equipment Manufacturers, the Oil Ministry and its subsidiaries are obliged to buy equipment via “the Integrated System for Protection of Domestic Production”, which contains a full list of registered local suppliers.
A total of 2,261 companies registered for the Oil Ministry listing for the oil and gas industry manufacturers. Eligibility of 453 applicant firms has been approved so far.
A committee to follow up on the production of important oil equipment by domestic firms was set up in 2014 by Oil Minister Bijan Namdar Zanganeh to promote domestic manufacturers of machinery and equipment.