Tehran Limits Imports of Oil, Gas Equipment

The initiative to produce major oil equipment gained traction in 2014.The initiative to produce major oil equipment gained traction in 2014.

Iran has placed restrictions on the import of some oil and gas equipment as part of efforts to boost domestic production in its resurgent energy sector, an official at the National Iranian Oil Company said.

Ramin Qalambor Dezfouli, NIOC's director for production support and procurement, added that Iran's Ministry of Industries, Mining and Trade has banned the import of 60 equipment used in the oil industry after appraising a list of 94 items, Oil Ministry's official news agency Shana reported.

"Since a year ago, NIOC and the ministries of oil and industries have closely coordinated on limiting the import of oil and gas equipment that are produced at home," Qalambor said, adding that more import bans are expected to be imposed over the next six months.

NIOC has identified 100 items as primary oil equipment, of which around 70 are produced by Iranian manufacturers.

Under rigorous sanctions imposed on Tehran's nuclear program, Iran started to produce some oil equipment through reverse engineering—a process to discover the technological principles of a device or a system through the analysis of its structure, function and operation.

According to Qalampour, production of major oil equipment gained traction in the early 2000s. But the initiative gained fresh impetus in 2014 when the Oil Ministry formed a committee to accelerate the production of 10 major categories of equipment in the oil and gas industry, including turbines, compressors and drilling bits.

Iran was deprived of much-needed equipment and technology to develop its oil and gas industry after the toughening of international restrictions in 2011 and 2012, which ostensibly targeted Tehran’s nuclear program but significantly undermined its foreign trade and banking relations.

Tehran started to gain access to billions of dollars in frozen oil revenues and equipment after the sanctions were scaled back in mid-January following a landmark deal with the six world powers in July last year on placing time-bound limits on its nuclear program.

In a statement last month, Oil Minister Bijan Namdar Zanganeh urged domestic producers of oil equipment to double their efforts and tap into regional markets.

However, some officials and experts argue that Iran’s opaque regulations in the financial and banking sectors and the government-dominated economy have left little room for private companies to boost exports and created big loopholes for rent-seeking.

Iraq, Afghanistan and CIS countries are seen as the biggest markets for Iran's oil equipment.