Afghanistan is set to purchase up to 1 million tons of diesel from Iran per annum, Oil Minister Bijan Namdar Zanganeh said on Wednesday.
After holding talks with Afghanistan's Minister of Trade and Industry Homayoun Rasa, Zanganeh said serious negotiations were held regarding Afghanistan's energy needs, the most important of which was diesel import from Iran and the pricing issues, IRNA reported.
"Afghanistan charges Iran $100 extra commercial profit for each ton of diesel," Zanganeh said, noting that talks will continue over diesel price until the dispute is settled.
Iran is yet to announce its proposed price.
Stressing that Iran's diesel export to Afghanistan stands at 200,000 tons per year, the official added, "Afghans have expressed readiness to increase import by 1 million tons, if negotiations yield positive results."
Pointing to the export of compressed natural gas to Afghanistan, the official said the very idea of embarking on such a project seems to have an acceptable profit margin, but we need time to develop it.
Commenting on Afghans' interest in importing 200,000 tons of liquefied petroleum gas from Iran, Zanganeh stressed that reasonably priced LPG would translate into a win-win deal.
Afghan Chief Executive Abdullah Abdullah,, who is heading a business delegation to Iran, explored grounds for expanding regional cooperation in energy and transportation sectors in separate meetings with Iranian officials in Tehran on Wednesday.
Iran's Rivals
Iran is capable of exporting up to 3 million liters of diesel to Afghanistan per day if it has the right strategy to prevail over potential competitors, Esmail Hasham Firouz, head of international affairs at the National Iranian Oil Refining and Distribution Company, said.
"Central Asia, including Tajikistan, Georgia and Armenia, are among countries Iran sees as potential customers," he said.
Referring to Turkmenistan and Uzbekistan as the main rivals of Iran in exporting diesel to Afghanistan, Firouz noted that NIORDC will increase its market share through timely and effective plans. He did not elaborate.
Stating that the Tajiks consume almost 3 million liters of diesel a day, he said, "This country can be among prospective customers. Nevertheless, Kazakhstan is a major competitor that needs to be taken into account."
According to the official, oil products such as diesel and liquefied natural gas are exported to Georgia and Armenia on an irregular basis.
Moreover, Iran will "turn into a key player in exporting diesel to regional markets" as soon as all South Pars development projects come on stream. The present surplus diesel production capacity stands at 25 million liters per day.
Fuel Smuggling
"Increasing the export of petroleum products to Afghanistan from official terminals will help curb fuel smuggling and ensure quality products are supplied to Iran's eastern neighbor," Zanganeh told Shana.
"More government-sponsored shipments will help restrain trans-border smuggling."
Over the first six months of the current Iranian year (started March 21, 2015), Iran exported 550 tons of diesel to Afghanistan per day. Officials from both countries plan to meet in future and negotiate boosting export of oil products from official terminals to rein in illicit cross-border trades.
South Pars is the world's largest gas field, shared between Iran and Qatar, covering an area of 3,700 square kilometers of Iran's territorial waters in the Persian Gulf. It adjoins Qatar’s North Field, which measures 6,000 square kilometers.
