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November 27, 2013 1:06 pm

Iranian Oil Industry Set for Boom as Markets Re-Open; India Ready to Order 21 Million Tons

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avatar by Joshua Levitt

Iranian oil tanker. Photo: WikiCommons.

Iranian oil tanker. Photo: WikiCommons.

The Iranian oil industry was already gearing up for a boom on Wednesday, as the deal with the world powers at the weekend allows Iranian crude to — at least temporarily — return to the global market, Deputy Oil Minister Kazzem Vaziri-Hamaneh said, semi-official state news agency FARS reported.

According to the U.S.-brokered deal reached at the weekend, the oil industry will see a six-month reprieve, along with other areas that have strangled the Iranian economy, including a ban on importing parts for cars and civilian aircraft and trading precious metals, plus access to some $7 billion frozen in international accounts. However, if Iran doesn’t live up to its commitments, U.S President Barack Obama promised to come down on the Islamic Republic with even harsher sanctions.

“Giant international firms are perceived to return to Iran’s oil and gas industries upon the complete removal of sanctions,” Vaziri-Hamaneh told reporters in Tehran. “Certainly, the annulment of sanctions will facilitate and accelerate exports operations and supply of Iranian oil to the global market.”

Vaziri-Hamaneh said that, with the removal of sanctions, the Iranian oil industry can return to some normalcy, albeit for the next six months included in the deal, with its customers buying and transporting crude from Iran with their own insurance and by their own tankers.

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In a separate report, FARS cited an interview with Indian Oil Secretary Vivek Rae on Press TV, another semi-official Iranian media outlet, as saying that India was prepared to return to its pre-sanction purchases of 21 million tons of crude oil next year if the sanctions disappear permanently.

India is a major energy importer, with Iran its second-largest supplier of crude before the tougher sanctions were imposed on Tehran two years ago, preventing countries from purchasing Iranian oil and conducting transactions with the Central Bank of Iran. Michael Mann, the spokesman for EU foreign policy chief Catherine Ashton, said on Monday that the EU could lift some sanctions against Iran in December or January, as part of this weekend’s new deal.

The Indian oil minister said that a delegation would come to Iran shortly to discuss the export plans. Until now, because of the sanctions, he explained, India paid for 45% of its purchases in euros, deposited at  Ankara-based Turkish Halkbank, until February, when that mechanism was also barred. Since then, it has not actually paid for those purchases, as attempts to pay with Russian rubles and other currencies proved too complicated.

“We probably imported $5 billion worth of crude oil from Iran. Of this, we may have to pay $2-2.5 billion to the Iranian oil companies,” Rae said. “We were importing 21 million tons of oil from Iran … If the sanctions get resolved, we can go back to 21 million tons.”

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