Iran offering crude, gas and condensate on IRENEX
Iranian Oil Minister Javad Owji said at the weekend that crude oil and gas condensates would be sold to foreign customers on the Iran Energy Exchange (IRENEX).
He said they would be available to domestic buyers at the same price during a particular period and expressed optimism that neighbouring countries would be interested in purchasing certificates of deposit (CDs).
During the unveiling of the crude oil and gas condensate CDs, the minister stated that the plan, which aims to encourage domestic investors and the general public to help sell oil, had been studied for over a year.
Owji revealed that IRENEX would offer 72mn barrels of crude oil and gas condensates annually through the issuance of CDs. The minister emphasised that CDs help to diversify and increase the transparency of exports. He said that the National Iranian Oil Co. (NIOC) had worked with the country’s economic sector for 16 months to examine the newly unveiled transactions and accomplish the plan’s objectives.
The minister commended NIOC managing director Mohsen Khojastehmehr for initiating the plan of transacting crude oil and gas condensates through CDs.
Tehran began experimenting with selling crude over the exchange in 2018 and 2019 in response to the US ramping up pressure on Iranian oil customers to reduce shipments, with oil products joining the slate in recent months. It has held offerings of light and heavy crude on IRENEX since October 28, 2018 as it tries to provide a variety of sales mechanisms to appeal to buyers.
In an effort to entice more buyers, the Ministry of Petroleum (MoP) cut the minimum purchase order from 35,000 barrels to 1,000 barrels for land delivery, while the clearance period for payments extended from 60 days to 90. Interested parties have to pay 6% of their order value in local or foreign currency two hours before trading begins.
The MoP specified that cargoes could either be delivered by sea at the Kharg Island terminal or by land at the Tabriz Refinery.
The amendments to the purchase and payment terms are nothing new. An amendment to the Iranian budget was approved on February 17, 2019, requiring the MoP to offer 2mn barrels per month of light crude on IRENEX. This came in addition to the 2mn barrels of heavy crude oil and 2mn barrels of natural gas condensates and natural gas the ministry was already obliged to supply to the exchange.
However, in the first few months following that announcement, a total of just 1.1mn barrels of crude was sold over the exchange.