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June 20, 2010

An interview with Hossein Noqrehkar Shirazi, deputy Iran’s Oil Minister for international affairs and commerce

Khabar Online’s interview with Mr. Noqrehkar Shirazi held to observe the present condition of Iran’s oil industry and dilemmas facing the entity as it pressed by the escalating waves of sanctions. As deputy minister, his responsibilities include communicating with foreign firms and countries seeking to invest or sign international energy deals with Iran’s Oil Ministry. Noqrehkar Shirazi was formerly a diplomat in Austria and other European countries, also a provincial governor and head of the board of directors of an oil industry support company. He worked in the Commerce Ministry as well.

It’s better to begin with the problems caused by sanctions imposed on Iran’s oil industry, to what extent the embargos have pressured the industry?

I do not intend to aggrandize the problems, but truly we are participating in an unequal competition with the world and still tackle all difficulties. Most of the countries have attempted to drive us into the corner, but we are exploring ways to achieve our goals. As you know the international banks didn’t and don’t open letter of credit (LC) for us, so we have adopted other methods. Fortunately we have been able to follow our works without facing a complex and deterrent problem, as we also encountered difficulties in terms of insurance but cleared them up by recourse to new initiatives.

I must add that some problems have been raised in transportation sector, but we have been able to resolve them even with more difficulty. Generally it can be said that although the sanctions have hiked up our costs, despite their negative impacts, we could smooth over the troubles. Even though Iranian contractors are in an unequal competition with international companies, we can witness that they are tender for outside contracts and participate at international projects. It shows that they have been able to counter existing problems.

Is it true that due to financial deficit and lack of on-time development, some of our oil fields are afflicted with fall of pressure and production drop?

Yes, it is true that the level of production has been reduced, but luckily the necessary financial resources have been allocated to the development of those fields and the issue will be resolved in near future. Under a five-year plan, 30 to 35 billion dollars will be allocated to the production sector annually which amounts to 170 billion dollars in five years. Based on the program, the necessary budget will be secured and there’s no need to be worry about that. We hope to stable the current capacity and increase the production within the next years.

According to some reports, Iranian crude oil basically has no customer, so to attract the potential buyers the oil officials offer considerable discount. It is also being said that we are selling our oil without opening LC, because no bank opens LC for the Islamic Republic. So we have to take numerous risks in the market. Is our oil export really under that much pressure?

Unfortunately yes, you know the same happens in many other countries and they give considerable discounts, but the situation of Iran is under the spotlight of media and so much highlighted. Of course it is true that they have made their utmost efforts to cause our fall. Actually putting up with so many problems and opting for new methods to preserve our status in the international markets has been and is extremely difficult.

I acknowledge that we sell are crude oil without opening a LC, but fortunately by now we have not faced a real trouble and we have been paid on time. However, so far the oil officials of Islamic Republic have not taken any action to degrade our status in the world.

As providing financial resource has become so difficult, the banks do not cooperate, oil production and marketing have become much costly, we still refuse to give in to defeat.

Even in a number of international travels we have witnessed that the officials of some countries have insulted us, but we are still play a role in international markets and sell almost 2,500,000 barrel of crude oil per day. If I want to answer you sincerely, perhaps in economic terms our method is not appropriate, but if the issue is viewed in political and security terms, it’s the best and the most rational method that we could adopt.

Don’t our officials intend to make the oil deals more attractive for potential buyers to defy the sanctions and attract the attention of investors to Iran?

Currently the condition is not that much difficult to make us change our route fundamentally. At the moment we are exploring initiatives to save ourselves from the impacts of sanctions, but we are not to amend our major policies. So, until further notice the format of our oil agreements will not change.