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Eurasia
October 19, 2018 www.intellinews.com I Page 20
Oil smuggling prospect opens up as Iran reactivates crude bourse
bne IntelliNews
Iran is reopening its domestic crude oil exchange in preparation for a first attempted sale — of 1mn barrels — on October 22.
The bourse was last used four years ago with limited success when US sanctions were employed to try to block Iranian oil exports —
as they will be once more from November 5 as the Trump administration attempts to throttle Iran’s economy to force Tehran to renegotiate its role in Middle East affairs.
The bourse will not be able to bring a boost to Iran’s oil sales that is seen as legitimate in Wash- ington’s eyes as any international buyers will still be subject to US secondary sanctions for dealing with Iranian entities, but any barrels sold via the exchange could allow smugglers to take oil out of Iran. From that point they could launder it into the global market, Iman Nasseri, Middle East manag- ing director for consultancy FGE Energy, told S&P Global Platts on October 10.
"Since the Iranian government or NIOC cannot get directly involved in negotiations with smugglers, this will allow a private middle-man ... to go and find buyers and arrange for logistics that could possibly be invisible to the monitoring systems," Nasseri reportedly said.
The move to re-establish the exchange was in line with "resistance economy" policies, state-con- trolled National Iranian Oil Co (NIOC) said. Resur-
Iran is both oil and gas rich. Its hydrocarbon fields are thought to boast the fourth largest oil reserves and second largest gas reserves in the world. Pictured is an oil and gas field in Ahvaz county, Khuzestan province, western Iran.
recting the trading option should diversify Iran's oil sales and bring the domestic private sector into the trade, it added.
NIOC is this week due to disclose full details, including the mechanism of sale, base price, delivery and payment terms on the first attempted transaction on the reopened bourse.
Private parties who buy through the bourse must attempt to resell the oil to international traders. NIOC typically sells its crude directly to foreign refineries. However, many have already begun
to retreat further purchases ahead of the US sanctions.
NIOC says the oil on offer would be eligible for resales to any destination, except for Israel. It will set the base price for the crude by examin- ing the prices it has received for its international consignments.
Buyers are obligated to pay 80% in foreign cur- rency and 20% in the Iranian rial.
The rial settlement based on an official rate will be in cash and before cargo delivery. Settlement of the non-rial portion will be on a credit basis, NIOC said.
Iran holds the fourth largest oil reserves in the world and is OPEC’s third biggest exporter of crude.