Trade in the Iran Energy Exchange (IRENEX) reached 1,480 trillion rials ($4.9 billion) in the last fiscal year that ended on March 20.
According to Ali Naqavi, managing director of IRENEX, this was 13% higher in value on the year before, the IRENEX website reported.
An estimated 2.3 million tons of hydrocarbons worth 250 trillion rials ($833 million) were sold in the domestic ring of the exchange. It also hosted energy carriers weighing 5.3 million tons worth 800 trillion rials ($2.6 billion).
Without providing details, Naqavi said trade dropped in volume terms, especially in the international ring and linked it to the hiatus in gasoline export last year.
“Around 8 million tons of gasoline was exported in 2020-21. But gasoline export was almost zero due to the rise in domestic consumption.”
As for other products, 11 billion kilowatt-hour electricity worth 6.73 trillion rials were sold via the IRENEX -- 21% higher in volume.
Standard salaf contracts worth 410 trillion rials were also traded last year, up 48% on the year before.
Standard parallel salaf is an Islamic contract similar to futures with the difference being that the total price should be paid in advance.
In the nascent derivative market futures contracts worth 8.6 billion rials were posted. The energy futures has a short history in IRENEX. It was launched for the first time in March, marking the last month of last Iranian year. Naphtha and methanol were the underlying assets of the first futures.
Energy futures are derivative contracts with energy products as the underlying asset. Market participants buy and sell energy commodities through energy futures at a predetermined future price and date.
New Financing Instruments Planned
Naqavi said there are plans to expand financing instruments at the IRENEX. It is to launch energy-backed certificate of deposits in the near future, a scheme seen by observers as a milestone in domestic energy trade.
An article in the Persian-language economic newspaper Donya-e-Eqtesad Saturday described the plan to launch commodity-based CDs as “a right move that could revolutionize the sale and financing mechanisms in the oil industry”.
Commodity CD is a security indicating ownership of the holder on a particular amount of a commodity supported by standard warehouse receipt issued by the warehouses certified by the Securities and Exchange Organization, the Iranian capital market regulator.
Selling CDs in the primary market means selling the stored or deposited commodity by the owner, and buying it means buying of such commodity. CDs securitize a company’s product inventory and offer buyers easy ownership of goods without the usual hassles of storage and insurance.
Lunching option contracts and commodity-based exchange traded funds are also on the IRENEX agenda.
Authorities are also trying to promote electricity trade and optimize energy consumptions across industries by setting up “Energy Saving Certificates”.
ESCs are tradable certificates that typically represent one megawatt-hour of energy saving. They are normally used to provide evidence of compliance with an obligation on electricity producers, suppliers or consumers to use energy of a specific type.
If energy producers do not meet the mandated target for energy consumption they are required to pay a penalty. The certificates are given to producers whenever an amount of energy is saved whereupon the producer can use the certificate for his own target compliance or sell it to other parties who cannot meet their targets.
