Oil Ministry Plans Outlined

Oil Ministry Plans OutlinedOil Ministry Plans Outlined

Oil Minister Bijan Namdar Zanganeh outlined the highly prioritized plans of the ministry in the current Iranian year (started March 20).

In a meeting with the members of Majlis Energy commission, Hossein Amiri-Khamkani, spokesman of the commission, informed Shana of the subjects discussed in the meeting.

“Electronic fuel cards for gasoline distribution will be scrapped, while diesel cards are not subject to any change,” he said.

Khamkani added that as the price gap of gasoline in Iran and the neighboring countries is small, gasoline smuggling is out of question, and Oil Ministry believes it should be scrapped but it is waiting for the government’s final decision.

However, the official announced that the distribution of diesel via electronic fuel cards will continue because its price is still much lower than its real value in Iran.

The distribution of gasoline with fuel cards was started eight years ago with the aim of achieving three main goals: curbing consumption, adjusting prices and cutting down fuel smuggling.

Most experts opine that under the current circumstances, maintaining the present system of gasoline distribution will yield no new result, since prices are unified and there is no gasoline subsidy.

During the eight years of the plan's implementation, gasoline price rose to 10,000 rials (around 28 cents) from 800 rials (2 cents) per liter, which shows the realization of one of the goals of subsidized gasoline distribution, which is adjustment of prices.

“According to the minister’s report, about 11 petrochemical projects with high value added will become operational during the current year,” he said. The petrochemical projects worth over $5 billion are said to include petrochemical complexes of Mahabad, Marvdasht, Kavian 2, Khorramabad, Karoon 2, Sanandaj, Kaveh and Asalouyeh.

“In the current Iranian year, some of the refinery plans will go on stream, the most important of which is the Persian Gulf Star Refinery [in the southern port city of Bandar Abbas],” Khamkani said.

He stressed that raising the quality of domestically produced gasoline to Euro-4 standards is also on the ministry’s agenda.

  New Oil, Gas Contracts

“The Oil Ministry’s main priority in the current Iranian year is promotion of Iran’s new petroleum contracts–aka IPC—that should be finalized in cooperation with the parliament as soon as possible, as the oil industry’s underinvestment must be alleviated,” Khamkani said.

The current buyback framework is no longer attractive for foreign companies and the government has established a new model that has removed the drawbacks of previous buyback agreements and created a new foreign investment model, particularly from Europe, to invest in Iranian projects.

Khamkani divided measures regarding IPC into two sections, saying the first part is about accelerating operations at joint oil and gas fields to safeguard national interests.

“Directives of the ‘Resistance Economy’ also emphasize the need to preserve the joint fields and raise their production capacity,” he said.

In a message issued on the first day of the new Iranian year on March 20, the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei named it the year of “Resistance Economy: Action and Implementation.”

Resistance Economy is a set of principles outlined by the Leader for bolstering domestic production and cutting dependence on oil revenues. Khamkani noted that the second scope of performance in this regard is to raise oil recovery from old wells, adding that if the current 25% oil recovery would be increased by further 10%, a whopping amount of revenues will be added to the country’s earnings.

Karim Zobeidi, deputy for consolidated planning at National Iranian Oil Company, said on Monday Iran has managed to increase oil recovery of wells by only 0.28% as part of efforts to fulfill the 1% increase plan envisaged in the fifth five-year development plan (2011-16).