Caspian Oil Swap Near 2.3m Barrels

Close to 2.3 million barrels of crude have been transferred from the port of Neka in northern Iran to Tehran refinery via the 32-inch Sari-Rey pipeline since the country resumed oil swap on August 3, the director of Iranian Oil Pipeline and Telecommunications Company said.

"Operations to swap the sixth batch of crude oil consignment from the Caspian Sea littoral states to the port of Neka in northern Iran with deliveries in the Persian Gulf were carried out successfully on Thursday," Seyyed Hamid Hosseini was also quoted as saying by IRNA on Friday.

The official noted that 47 large vessels with different capacities have discharged crude in the terminal storage reservoirs in Neka since the country resumed oil swap deal in August after a seven-year hiatus.

According to Hosseini, close to 580,000 barrels of oil are transferred from the terminal storage reservoirs in Neka to Tehran's refinery per month.

"Swap operations are conducted twice a month and as soon as the reservoir capacity reaches 360,000 barrels," he added, noting that the pipeline's current transfer capacity stands at 370,000 barrels per day, yet plans are in place to raise it to as many as 500,000 barrels a day by the end of December before increasing it to 600,000 barrels per day in the future.

Oil and gas company Dragon Oil, owned by Dubai-based Emirates National Oil Company, shipped an oil cargo from Turkmenistan to Neka Port in northern Iran on August 3 for swapping through the Persian Gulf, marking the first such operation by Iran since 2010.

According to Hosseini, Neka terminal has the capacity to swap 350,000 barrels of crude oil per day, yet it can increase to 500,000 as soon as necessary alterations are made in the terminal.

Reportedly, lengthy talks have been held between Russia's second-biggest oil producer Lukoil and the National Iranian Oil Company over oil swap operations. Nonetheless, no contract has been signed.

"Neka can store 250 million liters (1.57 million barrels) of oil and derivatives, but less than 10% of that capacity are currently in use and the forthcoming cargoes are forecast to increase the port's crude storage to 84 million liters, or one-third of the total capacity," Hosseini said.

Iran swapped as much as 130,000 barrels of crude oil per day and received $1 in transit costs for each barrel under a swap contract with four international companies before a decision to unilaterally end operations in 2010 under the previous administration.

Energy experts, including Oil Minister Bijan Namdar Zanganeh, believe oil swap can be an important source of revenue, as northern neighbors with abundant hydrocarbon resources need access to the sea in the south.