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Iran Economy Update
Issue 94/2017
MONDAY OCTOBER 30TH
Majles gave vote of confidence to Reza Ardakanian as minister of Energy
Reza Ardakanian, President Rouhani’s nominee for the ministry of Energy managed to receive 225 out of 276 votes from the parliament, versus 38 nays and 13 abstentions on Sunday.
Reza Ardakanian
Minister of Energy under Rouhani’s 2nd government Born: 1958, Ardakan, Yazd
BSc in Civil Engineering, Sharif University of Technology, Iran Master’s in Water Resources, McMaster University, Canada PhD in Water Resources management, McMaster, Canada
Biographical statement
A faculty member of Sharif University of Technology
UNU-FLORES1 Director
Director of UN-Water Decade Programme on Capacity Dev. hosted by UNU since 2007
Deputy Minister for Water Affairs (2001–2005)
Senior Vice Energy Minister (1998–2001)
Deputy Energy Minister for Planning & Economic Affairs (1989–1991)
Deputy Minister of Interior for Urban Development and Municipalities (1987–1989)
ISNA has reviewed the gist of Ardakanian’s remarks in the Majles in the past week on his agendas in this ministry. According to this news agency, Ardakanian has talked about drafting a comprehensive water document, paying attention to the wastewater and recycling technology, developing the production grid, date collecting and analyzing, revisiting the water economic structure, enhancing the role of non-government sector in implementing projects for developing wastewater structures, sustainable provision of drinking water, paying attention to water treatment facilities, reducing waste of water and pollutant, resolving the Gotvand Dam problems, and developing renewable energy resources.
NPC gets new Managing director
Petroleum Minister Bijan Zangeneh appointed Reza Nowruz-Zadeh as the new managing director of the National Petrochemical Company (NPC). Nowruz-Zadeh replaces Ms. Marzieh Shah-Daie who was promoted this week to senior vice minister of Petroleum.
Nowruz-Zadeh,65 was the managing director of the Social Security Investment Co (known as Shasta in Farsi) since 2016. Before that, he was the head of IDRO and also served for several years and the representative of the people of Esfarayen (North Khorasan) in the Majles.
1 The United Nations University Institute for Integrated Management of Material Fluxes and of Resources is an UNU System institute of the United Nations University.
2 CBI revisits foreign currency regulations
About 22 months since the implementation of the Joint Comprehensive Plan of Actions, the CBI has started revising the coutnry’s foreign exchange rules and regulations in order to modify and make them attuned to the post-sanctions realities.
A CBI official announced that the coutnry’s foreign exchange regulations are under revision and will be finalized by the end of this Persian year, local media reported last week. Mehdi Kasraie- Pour, the CBI director general of policies & forex regulations said some sections of the existing regulations –which are defined in seven sectors-- needed to be revisited in order to suit the post-sanctions conditions, and such revisions will be promulgated by 20 March 2018. Kasraie- Pour did not provide details but said the purpose of the revisions is facilitating the business conditions in the country. “Since 2002 that the first foreign exchange unification policy was seriously put into place, it was decided that the coutnry’s foreign exchange regulations be presented in the form of a package so as all the concerning people and businessmen be able to have access to them. Some segments of such regulations have been revised in the past 15 years though sanctions caused a halt for some years and now, we try to make up such setbacks and hope to be able to release the revised regulations by the end of this Persian year.”
In September, newly appointed CBI Foreign Exchange Director Ahmad Araghchi instructed the revision of the country’s foreign exchange rules/regulations in order to develop them to match the post-sanctions realities and improve the coutnry’s business environment.
The Iranian foreign exchange regulations are defined in seven sectors namely (1) imports of goods/services (2) freight transport, insurance and inspection (3) foreign exchange services and other international foreign exchange transactions (4) foreign exchange facilities (5) the instruction for providing the rial differences of the foreign exchange commitments (Documentary Bill of Exchange) (6) the foreign exchange operations of branch offices of the banks in free industrial/trade zones and (7) foreign exchange commitments arising from imports.
Oil official says Tehran expects signing $20bn worth contract in next 12 months
Deputy Petroleum Minister Amir-Hossein Zamani-Nia told the Financial Times on Oct 26 that Iran expects sealing energy contracts worth more than $20 billion in the next year. He said Iran is negotiating 28 provisional agreements with foreign companies including Maersk Oil and Rosneft to develop the oil layer in South Pars, and with Russian firms, Lukoil, Gazprom, and Zarubezhneft to develop oilfields, including Paydar Gharb, Ab-Teymour and Mansouri. “Any international oil company that you know, we are negotiating with . . . except the Americans,” he said, adding that Tehran anticipates signing contracts worth more than $20bn over the next 12 months. Zamani-Nia said he believed there was “no tangible change in international oil companies’ determination [to invest] and the speed of their negotiations with Iran” since Trump refused to certify Tehran’s nuclear deal with world powers this month.
...Iran negotiates developing oil/gas fields with several Russian firms
Meanwhile, an Iranian oil official said that Iran and Russian companies are discussing the latter’s participation in the exploration of oil and gas fields in the Islamic republic. “NIOC has signed MOUs with Lukoil, Rosneft, Zarubezhneft, Tatneft, Gazprom and GazpromNeft and we are negotiating for more than 10 oil/gas fields contracts," Russian Sputnik News quoted Saleh Hendi, the NIOC’s exploration directorate’s head. He presented a list of oil fields that are the subject of talks between Iran and the Russian companies: Mansouri, Ab-Teymour, Kish, Yaran, Maroon, South Pars oil layer, Kupal, Aban, Esfandyar, West Paydar, Dehloran, North Pars, Azar, Changouleh and Cheshmeh-Khosh. “Russian companies can allocate more shares of Iran oil/gas market via establishing strategic alliances with European, Chinese and South Eastern
3 Asian companies," Hendi added. He however said NIOC considers the solutions proposed by Russian oil companies to develop deposits on Iran to be “insufficiently effective” and asked to improve them. "We have not had a serious executive project with Russian companies in upstream sector so far, but about recent received proposals and negotiations, unfortunately, it should be noted that the key indexes of proposals submitted by Russian companies are too conservative, less economic, and too expensive," Hendi told the Sputnik news. "Iran's petroleum minister informed the Russian energy minister and Russian companies about these issues and a comparative report was also presented which made Russian authorities and companies convinced that they should make some improvements to their proposals."
Minister of Road visits Moscow on the eve of Putin’s travel to Tehran
Minister of Road & Urban Development Abbas Akhundi travelled to Moscow last weekend to discuss a broad cooperation agreement in housing, launching flights and energy sector, IRNA reported. In this trip, the Iranian minister met with the Russian minister of North Caucasus Affairs, minister of Construction, Housing and Utilities, minister of Energy, as well as the head of the Russian Railways.
In meeting with the Russian minister of North Caucasus Affairs, Akhundi discussed economic, tourism, transport and shipping cooperation. In meeting with the Russian minister of Construction, Housing & Utilities, Akhundi discussed cooperation in urban development and house building, and signed a cooperation agreement. In meeting with the head of the Russian Railways, Akhundi discussed railways and transport cooperation, and in a meeting with the Russian minister of Energy, cooperation in the transport sector was discussed. In meeting with Russian minister of Transport, Akhundi asked Russia “to take necessary measures to facilitate customs formalities and also facilitate issuing permit for the movement of the Iranian vessels in the Astrakhan Port.” Akhundi said the two countries’ cooperation in the transport sector especially in utilizing infrastructural capacities to activate the North-South corridor is satisfactory, and proposed holding a conference participated by Iran, Russia and India to prepare groundwork for the private sectors’ exchanges of ideas regarding the North-South corridor.
Last Thursday, the daily Jahan-e Sanat wrote that on the eve of the visit of Russian president to Tehran, new round of negotiations have been commenced between Russian oil companies and the Iranian oil officials. According to the daily, executive managers of Russian Gazprom, RussNeft, and ZarubezhNeft were in Tehran last Wednesday to follow up on the MoUs they’ve signed to develop a number of Iranian oil fields.
Austrian Oberbank clears Iran-Europe euro payments
In an interview with Mehr news last Wednesday, Behzad Golkar, an Iranian capital market senior expert gave more details about the deal signed on September 22 between Austrian Oberbank and 14 Iranian banks. “With signing this contract, money transactions through banking channels has become possible and Oberbank will clear all the international euro-based banking operations [for Iran]” he said. “[previously], not only the Iranian companies used to face problems in money transactions in attracting foreign investor, investment in projects, or even purchasing machinery, equipment and parts, intermediary goods, but they also were facing spiraling transaction costs but now, such problems have to some extent been resolved,” said Golkar. “Based on the established system between the 14 Iranian banks and Oberbank, undertaking all the banking transaction operations has become possible and this Austrian bank will clear all the euro-based international transactions,” he added.
4 Golkar explained that even after the JCPOA implementation, some money transactions should have been conducted either through foreign exchange offices or via a limited number of branch offices of Iranian banks abroad but now, through this newly-established banking system with Oberbank, the coutnry’s export-oriented companies can easily conduct foreign exchange operations.
Iran deals/negotiations with foreign companies
country sector Note
Norway LNG The first contract for selling natural gas for turning into the liquid form (LNG) was signed between NIOC and IFLNG (owned by the Khark Gas Refining Company and Norwegian Hemla), the daily Jahan-e Sanat wrote on Oct 26. Under this 20-year contract, the Caribbean FLNG (a floating liquefaction and storage facility) will be placed in Pars Port Complex in the middle of the next Persian year to receive and transform 2.3 million cubic meters per day of natural gas to LNG.
Germany and France
petrochemical The managing director of the Jam Petrochemical Company said negotiations with German Linde and French Technip are ongoing and the sides are on the verge of final agreement and signing contract.
Germany energy The first joint commission between the Iranian ministry of Energy and the German ministry of Economic Affairs & Energy was held last week in Tehran with a focus on deepening relations and exchanging experience in developing renewable energy resources, Donyay-e Eghtesad wrote last Thursday. During this joint commission, the Iranian Ministry of Energy’s head of the developing & supporting exports and also the German deputy minister of Economic Affairs & energy delivered speeches.
Russia Oil NIOC Managing Director Ali Kardor said that banking issues for exporting Iranian oil to Russia have been resolved and supplies of 100,000 bpd of Iranian oil to a Russian oil company will soon start, Shana news agency reported on Saturday. Kardor said that half of the money is received in euro and the rest, in the form of Russian goods and equipment.
Turkey trade In a ceremony held at the Turkish Embassy in Tehran to mark the 94th anniversary of the Republic Day of this country, Iran’s Minister of Industry, Mine & Trade Mohammad Shariatmadari said Ankara has a “special place” in Iran’s foreign relations, and emphasized on the two countries’ resolve to increase their annual trade volume to $30bn from the current $12.7bn. Shariatmadari said the two countries are negotiating to add more 60 products to the list of the goods qualified for preferential tariff treatment.
