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Iran to increase oil swap with Caspian states

21 September 2017 12:21 (UTC+04:00)
Iran to increase oil swap with Caspian states

By Kamila Aliyeva

Iran seeks to increase the crude oil swap with Caspian states in a bid to boost the overall efficiency of Islamic Republic’ energy sector.

The country plans to up the volume of crude oil swap with Caspian states to 40,000 barrels per day by the end of 2017, said Sirafkan Ghorbani, an official at the National Iranian Oil Pipelines and Telecommunication Company.

The volume currently stands at averagely 10,000 barrels per day, Ghorbani said, Iranian Oil Ministry’s official website ‎reported Sept. 18.

Ghorbani said that the volume of oil swap is planned to reach 200,000 b/d in 2018.

Back in August, Iran confirmed that has received several oil cargoes from Turkmenistan in the Neka port.

The official further noted that over 720,000 barrels of crude oil, unloaded in Neka port, is delivered to Tehran and Tabriz refineries from the beginning of the crude oil swap last month.

The companies deliver oil to the Neka port for being used in Tabriz and Tehran refineries, located in northern Iran, and take the same amount of Iranian oil in Persian Gulf.

Ghorbani said that the aforementioned volume is transferred in stages through the 32-inch Neka-Sari-Rey oil pipeline.

At the moment, the pipeline and the related facilities have capacity to transfer 370,000 barrels of crude oil per day, however it can be increased to 500,000 barrels, he added.

In early august, a source in Azerbaijan’s oil and gas market told Trend that Dragon Oil and Emirates National Oil Company (ENOC) had delivered the second Turkmen oil cargo to Iran.

Oil swaps make possible for Iran to optimize oil deliveries to refineries in the north of the country because the greater portion of oilfields is concentrated in the South Iran.

Before the introduction of sanctions, Iran was an active participant in swap operations, which began in 1997 on the basis of signed contracts. Under the oil swap agreements, which were in place for over 12 years, Iran received crude oil of Azerbaijan, Kazakhstan and Turkmenistan in the Neka port and delivered an equal volume to the clients of the same countries in Persian Gulf.

From 1997 to 2009, the total income received by Iran from these swap transactions amounted to $880 million.

In 2010, Tehran stopped the swap arrangement with Kazakhstan, Turkmenistan and Azerbaijan, arguing that the $1 a barrel fee charged had to be increased and based on the international crude oil price. The Hague International Court of Justice fined the National Iranian Oil Company $5.5 million due to stopping the swap of oil with its international partners.

In 2012, Iran tried to revive the old swap deals. However, the Iranian petroleum sector had been subject to EU and U.S. sanctions, while Naftiran Intertrade Company (NICO) was put on a U.S. blacklist. This meant that any direct trade, even by non-U.S. companies, with NICO would lead to penalties by United States. Following the nuclear deal concluded between Iran and the six world powers, Iran voiced its interest in reviving the previous swap agreements.

Iran has huge reserves of oil as its proved reserves for 2017 amounted to 137.6 billion barrels of oil. The country ranks fourth in the world for oil reserves.

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Kamila Aliyeva is AzerNews’ staff journalist, follow her on Twitter: @Kami_Aliyeva

Follow us on Twitter @AzerNewsAz

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