Page 40 - bne IntelliNews Country Report: Iran Dec17

strike deals for the 'low-hanging fruit'. US giant Boeing, meanwhile, would like clearance to sell many billions of dollars worth of airliners to Iran, but has so far not received the green light from Washington, DC given the fraught state of affairs between the Iranians and Americans. Iran has the fourth highest oil reserves and second highest gas reserves in the world and, because of the cheap feedstock such resources provide, can produce highly competitive petrochemicals.
Iran is looking to substantially up its exports of crude oil to global markets beyond the current volume of 2.2mn b/d, according to Fars news agency, citing an Iranian energy official as saying the country hoped to gain from the current rising price of crude on world markets. Iran is not limited by the current Organization of the Petroleum Exporting Countries (OPEC) production cap, as it is playing catch-up on lost oil sales caused by the years of international sanctions. "This [oil export increase] will be carried out as a new type of Iranian crude is presented to clients," director of international affairs at the National Iranian Oil Company (NIOC) Saeed Khoshrou reportedly said, addressing a meeting of the Asia-Pacific Economic Cooperation (APEC) in Singapore on September 25. He reiterated that Iran still had huge potential to further increase its oil production, especially given the fact that a majority of its onshore reserves still remained untapped. Around 70% of Iran’s oil reserves are located in offshore reservoirs in the Persian Gulf. Iran has previously said it could push the current production rate up to 3mn b/d within the next 12 months with increased output being facilitated at older wells.
Iran’s oil revenues rose 333.2% y/y in the first quarter of the Persian calendar year (March-June) to hit IRR188.9tn ($4.97bn), the Financial Tribune reported on August 28. The Rouhani administration is seeking to shift Iranian reliance on oil sales as the country’s main source of income, but it fell short of progress in achieving this goal in the first quarter. Oil revenues overtook tax revenues again, following last year’s jump in income from VAT, set at 9% in 2015. Iran earned IRR188tn in tax revenues in the first quarter of the Persian calendar year, short of the estimated target of IRR296.7tn ($7.8bn).
9.1.2 Automotive sector news
Iran’s automotive production increased 20% year on year in the first five months of the current Iranian year (started March 21), to 496,833 units, according to government data. It is estimated that Iran will produce more than 1.4mn vehicles this year as part of the country’s push to upgrade its ageing car stock. Some estimates put the average age of vehicles in the country at 10-years-old, whereas in Europe the figure is around 6-years-old.
The Rouhani administration has announced a planned new tax on Iranian automotive production of IRR25mn ($650) per unit, Donyaye Eqtesad newspaper reported on August 15. The government has applied a string of various taxes and charges to car manufacturing, adding at least an average 10% to the total value of each sold vehicle. The tax is expected to generate $300-$600mn in extra taxes for the government. According to Iran’s industry ministry, during the first four months of the current Iranian year (started March 21), 192,429 new cars were produced.
40 IRAN Country Report November 2017 www.intellinews.com