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Iran reportedly plans to streamline its impending sales of oil to Europe by building refineries there and has closed or is working on deals to do the same in Africa, East Asia and South America.
“At present, some of these negotiations have been finalized and a number of European parties have taken up to start building these refinery units with Iran’s partnership,” one anonymous source told Iran’s Fars News Agency on Saturday. “Based on the decisions, Iran’s oil will be sent to the refineries and will be sold in host countries after being refined.”
The source said Iran is holding similar talks, which he characterized as “serious negotiations,” with several countries outside Europe, including Brazil, India and Indonesia, on building refineries there as well.
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And on Monday, Mir Ali Asghar Sajedi, the managing director of the National Iranian Oil Engineering and Construction Co., said its representatives had reached a tentative agreement with Sierra Leone to build refineries there and help ensure sales in Africa.
Iran has been conducting these talks for some time, since it became clear it would be free of international sanctions on its oil and financial industries imposed because of its nuclear program. In July, Tehran reached a deal with six world powers under which it would limit the program, under United Nations supervision, in exchange for a lifting of the penalties.
Two months ago, Mohsen Qamsari, the director of international affairs at the National Iranian Oil Co. (NIOC), said Iran was holding talks with the owners of refineries in Asia and Europe about buying shares in the facilities to ease Iran’s return to the world oil market and safeguard efficiency and profitability in the long term.
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“Crude marketing through investment in the refineries of the target countries for export of Iran’s oil is a long-term program,” he said at the time. “Our officials both in Europe and Asia are negotiating to purchase the share of some oil refineries.”
Other anonymous Iranian sources said the flow of exported oil can occasionally be delayed, and that the overseas refineries would ensure Iran’s customers enjoy uninterrupted supplies of refined crude oil products. As one official put it, “If this plan comes to fruition, we … will refine our oil in other countries without any worries.”
As long ago as May, Abbas Kazzemi, Iran’s deputy oil minister, disclosed that energy officials in Brazil and India also had sought Iran’s help in building refineries on their soil. He said Brazil wanted to build a refinery capable of handling 300,000 barrels of oil per day, and that India envisions a facility with a capacity of 400,000 barrels per day.
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Fars reported that before the sanctions were imposed, Iran had planned to build nine refineries in Asia and Europe in collaboration with private contractors. During the past year, as it began to become clear that Iran’s nuclear negotiations with the six world powers were likely to be successful, potential oil customers in Europe began negotiating purchase agreements with the NIOC.
Iran once exported 2.3 million barrels of oil per day until the sanctions severely limited its access to customers. But once the sanctions are lifted, probably in early 2016, Iran said it expects to increase oil production to 500,000 per day immediately, and to 1 million barrels per day within six months. Eventually it hopes to at least double that volume to match its pre-sanctions output.
By Andy Tully Of Oilprice.com
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Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com