Oil Equipment Exports to Neighboring States

Oil Equipment Exports to Neighboring States Oil Equipment Exports to Neighboring States

Iran exports domestically-manufactured oil equipment to the Persian Gulf littoral states as well as Central Asia, deputy oil minister for research and technology said on Friday.

“Domestic companies are capable of producing 65% of the equipment with quality compatible with international norms,” Mohammad Reza Moqadam, who also is a deputy oil minister, was quoted as saying by IRNA.

On plans to manufacture 10 categories of high-demand equipment for the oil sector, Moqadam said when this much-needed equipment is produced by Iranian companies it will “help save the oil industry and the economy in general, millions of dollars.”

According to the official, the manufactured equipment includes both upstream and downstream sectors of the oil/gas industry. Upstream equipment accounts for 80% of exports.

Referring to contracts signed with Iranian companies Moqadam said more than 52 contracts worth $22.5 million have been signed so far.

Oil Minister Bijan Namdar Zanganeh recently urged domestic producers of oil equipment to double their efforts and tap into regional markets.

“Iranian oil equipment manufacturers should look beyond domestic markets and keep an eye on exports to neighboring countries,” Zanganeh said.

The Oil Ministry has a mandate to support Iranian producers of oil equipment and finalize a list of top firms to compete in oil and gas tenders, he said.

In 2014, the ministry set up a committee to pursue the production of 10 major categories of equipment for oil and gas industries, including turbines, compressors and drilling bits.

“Boosting the production of these 10 categories, which comprises thousands of equipment, can create jobs. Local firms in Khuzestan Province can produce most equipment and parts for refineries except some machinery,” Moqadam said without elaboration.

  Domestic Hurdles

However, officials admit domestic manufacturers face obstacles when it comes to penetrating the huge export market.

According to Mohammad Hassan Didevar, member of the board of Iranian Petroleum Industry Equipment Manufacturers, Iran’s opaque regulations, namely in the financial and banking sectors, and the government-dominated economy are barriers making way for rent-seeking and leave little room for private enterprise to boost exports.

The government has recently asserted that it will create the conditions for both Iranian and foreign producers of oil/gas equipment to compete on an equal footing.

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

Reza Padidar, managing director of Society of Iranian Petroleum Industries Equipment Manufacturers, says domestic companies are capable of manufacturing 70% of the equipment while only 30% of the industry’s spare parts and equipment are imported.