Although Iranian oil and gas equipment and machinery can compete with foreign brands, manufacturers still cannot have their fair share in international markets, head of the Iranian Oil Equipment Manufacturers' Association said.
"Underdeveloped infrastructure, especially in power and natural gas sectors, US sanctions and unclear contracts are among the most formidable challenges with which local companies have to deal," Ehsan Saqafi was also quoted as saying by ILNA.
Domestic companies have indigenized almost 85% of petroleum and gas processing and production equipment. Despite the progress, they still face an array of difficulties that do not allow them to compete with foreign products whose quality is even lower than Iranian goods, he added.
Saqafi said the remaining machinery and tools (15%) cannot be made domestically either due to tech shortcomings or lack of basic materials, adding that no country can be 100% self-reliant and setting up production lines for some parts and equipment is not cost-effective and must be imported.
“Self-reliance does not mean that a country must meet all its needs domestically,” he added.
According to the official, most Iranian oil and gas equipment are exported to Venezuela, but due to recent changes in the country’s oil ministry, sending products to Caracas has hit the wall.
“Sanctions have also added to our challenges and we can only sell commodities in a few Persian Gulf littoral states and Central Asia,” he said.
“It is regrettable that Iranian producers have to use European labels and brands to be able to enter other countries’ markets.”
Locally-produced equipment are compliant with international standards, but still domestic firms cannot play their role in international markets because global standard organizations (mostly American) are not willing to provide Iranian producers licenses (due to US acrimony over Iran’s nuclear energy program).
Self-Imposed Sanctions
This potential notwithstanding, domestic manufacturers are also saddled with self-imposed sanctions as the government is not willing to work with the private sector, he complained.
The association has 750 members, most of whom are operating at less than half their capacity.
Saqafi voiced concern over the shutdown of businesses and other problems like raw materials being held up in customs offices.
"Unfortunately, those in charge of industrial policy are not producers,” he said.
The bloated bureaucracy and cumbersome rules are undermining the present and future markets for domestically-made oil equipment and parts, despite the good quality, he complained.
Private companies can handle the US sanctions as was the case in the past, but unstable trade policies, complex banking regulations and other problems have made it difficult to evade the unilateral and hostile US sanctions.
Washington reimposed new economic restrictions on Tehran in 2018 after pulling out of the nuclear agreement, under which Tehran had agreed to curb its nuclear activities in return for sanctions relief. The deal was signed between Tehran and six major powers, namely the US, Russia, China, Britain, France and Germany.
Echoing the protests of most stakeholders in the private sector, the official said, "We meet regularly with the Ministry of Industries, Mining and Trade. Problems cannot be addressed with hollow slogans."
He questioned the need of such gatherings with senior industry officials from “which nothing of essence is achieved.”
Saqafi said as long as middlemen and brokers are participating in oil and related tenders, private enterprise will not be able to assert itself, play its destined role and contribute to economic growth.
