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Sanctions Underpin Iranian Oil Companies: Business Monitor

Service : Economy
TEHRAN, May 23 (ICANA) - Although U.S.-led sanctions have had some impacts on Iran’s energy industry, but they have made domestic oil companies gain achievements such as cutting gasoline imports, said Business Monitor International (BMI) in its new report titled “Iran Oil & Gas Report Q1 2011”.
Monday, May 23, 2011 8:58:14 PM
Sanctions Underpin Iranian Oil Companies: Business Monitor

BMI explained the two main impacts of sanctions on Iran’s oil industry as reducing foreign investment and increasing role for domestic state-owned companies.

he report emphasized that sanctions have had a psychological effect on Iran about disruption to the supply of refined products through possible new sanctions, which in its turn has pushed Iran to significantly expand its refining capacity.

Business Monitor said the strategic program of expanding refinery capacity of Iran which involves the construction of seven new refineries, fulfils three strategic purposes for the country.

The report explains the first strategic purpose of the plan as helping to meet rising domestic demand for fuels (gasoline demand is growing at around 9% per annum) and will allow efficiency gains by allowing refineries to process a heavier crude slate.

“Second, it increases the security of Iran’s fuels supply, which has been explicitly threatened by proposed U.S. sanctions,” the report added.

Third, it is also in line with the strategy pursued in other major regional producers such as Saudi Arabia to increase the value added to oil exports through refining crude domestically and exporting refined products. As part of this policy, the National Iranian Oil Company has set itself a target of also developing the petrochemicals industry and oil-based manufacturing. Long term, crude exports are at the bottom of the country’s priority list, with exports of refined products playing an increasingly important role,” the report further said.

BMI added that the restrictions on foreign involvement in Iran’s oil and gas sector have also led to an increased role for local state-owned companies. “NIOC’s strategic aims include the development of national technology in the oil sector through the promotion of local companies, such as NIOC subsidiary the North Drilling Company which constructed Iran’s first ever deepwater drilling rig in 2009,” the report clarified.

Pointing to Iran confrontation to U.S. and EU sanctions that restricted the availability and raised the costs of gasoline imports, BMI said: “In response to U.S. and EU sanction, Iran began enacting emergency measures to convert its petrochemical sites into gasoline producing facilities, the Financial Times reported in September 2010. Iran said that it could produce about 15 million liters of high-octane gasoline at three petrochemical sites: Borzouyeh, Avecina and Imam Khomeini, and a plan to convert up to seven other petrochemical sites was underway at the time of the report.”

Business Monitor International is a leading, independent provider of proprietary data, analysis, ratings, rankings and forecasts covering 175 countries and 22 industry sectors.

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