Oil ministry announces new terms for offerings at IRENEX

November 19, 2019

TEHRAN – Iranian Oil Minister Bijan Namdar Zanganeh on Monday released a statement in which new regulations and procedures for offering oil and gas condensate at Iran Energy Exchange (IRENEX) were listed, Shana reported.

After several unsuccessful offerings of light crude oil, NIOC recently halted the crude oil and gas condensate offerings at IRENEX, announcing a decision for revising the regulations pertain to the offering of oil at IRENEX once again.

Based on the statement, like the previous rounds of offerings, every week at least two million barrels of light crude oil, two million barrels of heavy crude oil, and two million barrels of gas condensate will be offered at the energy exchange.

The base price stated in the bid announcement will be the determined against valid crude price indices. The announced base price is the floor price applicable on the day of delivery and no discount will be applied later on. In every offering, the base price will be determined by NIOC.

Like before, the least amount of loadings for shipping is announced to be 35,000 barrels and for land freights it is 1,000 barrels, so in case of lower purchases, the buyers can accumulate their purchases in several periods and load them together.

Applicants have to initially pay six percent of the value of the contract in the form of rial or other acceptable foreign currencies and in case their bidding is accepted they must pay the rest before loading the purchased cargos.

This is the second time that the oil ministry is revising the terms of crude oil and condensate offerings at IRENEX.

First in May, NIOC decided to halt the offering of oil and gas condensate at IRENEX to prepare new guidelines for the later offerings. 

Accordingly, for the 10th round of light crude oil offering which was the third round of offerings in the new Iranian calendar year (started on March 21) NIOC decided to offer two million barrels of light crude instead of the previous one million barrels.

The least amount of purchase was also reduced to 10,000 barrels from the previous 35,000 barrels.

However, clearly even those adjustments had some flaws and were not enough to attract buyers, so NIOC decided to once again make new changes in its regulations.

Removing some of the barriers regarding approval of the bidders and strict pre-payment rules, the new regulations are aimed for encouraging domestic buyers for more engagement in the country’s oil and condensate trades. 

Offering crude oil and gas condensate at IRENEX is to materialize the objectives of “Resistance Economy” for diversifying methods of selling these products and benefitting from the capabilities of private sector for exporting them.

National Iranian Oil Company offered light crude oil at IRENEX first on October 28, 2018, just a few days before new U.S. sanctions on Iran’s petroleum sector took effect (November 4).

Offering gas condensate at IRENEX came after the successful offering of crude oil at this market. And then the turn came to heavy crude. Offering heavy crude at IRENEX came after NIOC offered light crude at this stock market in eight rounds. 

Now, after one year, the released reports show that sales of these products has not been so successful and welcomed.

IRENEX Managing Director Seyed Ali Hosseini believes that policymaking and execution are not integrated, and it is the reason behind the slow trend of the trades in IRENEX.

EF/MA

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