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Iran Economy Update
Issue 41/2017 MONDAY APRIL 3RD
Petroleum projects worth $20bn to be inaugurated this year in South Pars region
Petroleum Minister Bijan Zangeneh who visited the South Pars projects in Assalouyeh region during the Nowruz holidays said that six phases of this field will be inaugurated soon, which add some 150 million cubic meters per day to the country’s natural gas production capacity, Shana news agency reported last Thursday. The minster was accompanied by the managing director of the National Petrochemical Company (NPC) and visited some petrochemical complexes in this region as well. Zangeneh boasted that under the Rouhani administration, some 11 phases (out of 24 phases) of South Pars gas field came on stream, which caused the country gradually wean away from relying on gas imports. He said 1396 will be an “exceptional” year for the coutnry’s petroleum industry during which a “unique and historical” project will be inaugurated, according to Shana. Zangeneh said the projects that will be inaugurated this year in the South Pars region are worth $20 billion, and include six phases of South Pars gas fields, as well as the South Pars oil layer and number of petrochemical projects.
...Zangeneh says Iran’s oil (condensates included) exports averaged 2.8 million...
Zangeneh also gave some statistics about the volume of oil plus condensate production and exports in 1395 (ended 20 March):
“For the first time after several years, we didn’t face sanctions in 1395 and fortunately managed to increase crude oil production by more than one million barrels per day.”
“The exports of condensate in the Persian month of Azar (22 Nov – 21 Dec) grew 2.5- fold compared with the time this government took office (in Aug 2013).”
“Iran’s export of crude oil in Azar 1395 reached 2.3 million bpd, indicating a 2.4-fold increase compared with the first 5 months of 1395 (covering 21 March – 21 Aug 2016).”
“The export of Iran’s crude oil plus condensate in the Persian month of Esfand hit the historic record high of about 3 million bpd.”
“The average amount of Iran’s export of oil and condensate in the last months of 1395 reached 2.8 million bpd.”
“The pace of increase in production and exports of our oil was amazing to the international observers who couldn’t believe Iran is able to increase its crude production by one million bpd during three to four months after the lifting of sanctions.”
Note 1: condensate is light oil which is produced with natural gas from gas fields and is usually used for petrochemical plants as feedstock.
Note 2: Industry experts believe that although the figures given by Zangeneh are realistic, the Islamic Republic cannot rise the figures of oil output farther because of the limits it faces in technology and capital. 3.7 million bpd is the maximum figure some oil industrialists believe Iran is able to produce from its oil fields. Of note, in an interview with the Seda Weekly magazine in early March, NIOC Managing Director Ali Kardor had admitted that some of the oil fields from which production had declined under sanctions have not come back to the production line and even some of them have exposed to high levels of salt.
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Iran attracted $12bn in foreign investment in 1st year of nuclear deal implementation Ever since the implementation of the nuclear deal, some $12.048 billion has been attracted in Iran in investment, with Germany having the lion’s share of 3.962 billion, Mehr news wrote on Saturday. During this time, North Khorasan has been the top province in terms of attracting the highest amount of foreign investment, according to a report the ministry of Economic Affairs &
Finance has published. Before the implementation of the nuclear deal and while the country was under sanctions, the highest amount of foreign investment that flew into the country was in 2012, when some $4.700 billion came to the country, up from $3.100 billion in 2013 and $2.100 billion in 2014.
Iran’s customs releases figures on foreign trade in 1395; exports to Korea registers record high
The Iranian Customs administration has published the statistics of the country’s foreign trade in the Persian year of 1395, and some details have been summarized in the following tables.
Item 1394 1395 y-o-y change imports 41.539 43.684 5.16%
non-oil exports 42.429 43.930 3.54%
Figures are in billion dollars
Top five non-oil export destinations Country
1394 1395 y-o-y
change
% Value Share of
total %
Value Share of total %
China 7.678 18.10 8.377 19.07 9.11 UAE 7.237 17.06 7.436 16.93 2.75 Iraq 6.225 14.67 6.111 13.91 -1.84 Turkey 3.363 7.93 3.244 7.39 -3.53 Korea 1.99 2.06 2.877 6.55 229.89 other 31.92 40.19 15.886 36.15 -6.85 Total 42.929 100 43.930 100 3.54
Figures are in billion dollars unless specified
Top five import sources Country
1394 1395 y-o-y
change
% Value Share of
total %
Value Share of total %
China 10.477 25.22 10.753 24.62 2.64 UAE 7.765 18.69 6.407 14.67 -17.49 Korea 3.680 8.86 3.460 7.92 -5.96 Turkey 2.988 7.19 2.738 6.27 -8.36 Germany 1.822 4.39 2.537 5.81 39.23 other 14.807 35.65 17.788 40.71 20.14 Total 41.539 100 43.684 100 5.16
Source: Ira’s Customs administration
In a related development, the latest statistics released by the Eurostat, the statistical office of the EU, shows that Iran’s trade with the 28 members of the European Union raised by 78% in 2016 compared with the previous year, and reached 13.744 billion euros from 7.689 billion euros, Tasnim news agency reported.
3 2015 2016 Change EU exports to Iran 6.454 8.246 27.7%
EU imports from Iran 1.235 4.496 264%
Iran-EU total trade 7.689 13.744 78.74%
Figures are in billion euros
The Eurostat figures shows that Germany was the biggest exporter to Iran in 2016 whose exports grew 26% compared with the previous year and reached 2.599 billion euros. Italy (1.541 billion euros) and Netherlands (712 million euros) were the second and third biggest European exporters to Iran in 2016. Also, the top three big importers from Iran in 2016, according to the Eurostat report, were France (imported 1.35 billion euro worth of goods), Italy (1.049 billion euros), and Spain (870 million euros).
Iran’s renewable energy generation capacity to reach 850 MW this year
The Iranian Student News Agency (ISNA) published a report on Sunday on the government’s plans this year for developing the country’s renewable energy resources. “In 1396, the country’s renewable energy capacity will reach about 700-850 MW,” wrote ISNA. About 90% of the generated capacity will be in the solar and wind sectors, wrote the news agency, adding that most of the plants will be of 10, 20 and 30 MW capacities. Also, five waste-to-energy plants are planned to be built with the total electricity generation capacity of 9 MW, and most of such plants will be placed in northern area of the country.
CBI Governor says lopping zeros off national currency may take place in 2-3 years
CBI Governor Valiollah Seif admitted the necessity of removing zero(s) from the national currencies but said this will take place when we can make sure about stability of the economy and persistence of single digit inflation rate, Mehr news agency reported on Sunday. He said that conditions for redenomination of the national currency “maybe” prepared in 2.-3 years.
Of note, on December 7th, 2016, the Iranian Cabinet approved a bill proposed by the CBI on changing the coutnry’s monetary unit from the formal name “rial” to informal name “toman”, which means eliminating one zero off the current national currency, the rial1. As we discussed at that time, if being implemented, this currency move is indeed a change in terminology that won’t make a great difference for most Iranian citizens or even for the economy. On his Telegram channel app at that time, Seif however had underscored that what has been proposed in the CBI bill is [just] a change in the monetary unit, which is different from a plan to eliminate three or more zeros off the currency as part of making an overhaul in the country’s national currency structure. He explained that implementing the plan to lop more zeros from the national currency requires suitable economic conditions including single digit inflation rate and economic stability.
Shargh daily says Brexit has made Iran’s trade more attractive to British government A “Notice to exporters 2017/18” released by the British government on March 22 on withdrawing the Iranian companies from sanctions list has taken attention of the 1st issue of the reformist daily Shargh in 1396. The daily sees a link between the British government’s decision to remove the “Iran List” and the Brexit (Britain leaving the EU).
Note: the statement issued by the UK Department of International Trade describes what the
“Iran List” means: “The Iran List was published by the Export Control Organisation (ECO) to help
1 One toman equals to 10 rials.
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exporters make informed decisions about whether their exports might potentially be of concern on end- use grounds. This is where an export licence is required for goods not normally subject to control because the exporter is aware, or has been informed by the UK Government, that there is concern about diversion to a Weapons of Mass Destruction (WMD) programme. The list, which identified a range of entities, companies and organisations in Iran, was published to help exporters judge whether their exports might potentially be of concern on end-use grounds, based on ECO’s previous decisions about exports.”
Click here to read the full statement.
Shargh argues that “with the withdrawal of the UK from the EU, this country is going to compensate for the gap it sees in its foreign trade. One of the best available options to this country is the post-sanctions Iran that having experienced an economic growth, is thirst for imports. Thus, it is not surprising that the British ministry of Foreign Affairs issues a statement for facilitating trade of its businesspeople with Iran; a statement which is encouraging for the British traders that were worried about falling afoul of potential penalties for engagement in deal with Iran.”
