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A Reliable
Source of Energy
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Oil Minister Nozari says Iran wants to be the second-largest gas producer in the world and claim a 10 percent share of the global gas trade, either through pipelines or liquefied natural gas.
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The rise of Iran continues. And that rise was made abundantly clear during the 19th World Petroleum Congress in Madrid in early July.
A large, supremely confident Iranian delegation attended the triennial gathering that brings together energy officials from all over the world. The Iranian contingent in Madrid was many times larger than the one that attended the 18th World Petroleum Congress in Johannesburg in 2005.
This year, the Iranians had a huge installation inside the sprawling Madrid Fair exhibition space near the airport. The Iranians’ confidence was fully apparent during the July 2 “ministerial session“ presentation made by Gholam-Hossein Nozari, Iran’s minister of petroleum.
Nozari said that Iran plans to increase its oil and gas output dramatically over the next few years. He added that by 2014, Iran’s oil output will jump to 5.3 million barrels per day, from the current 4.35 MMbbl/d.
Natural gas output is projected to soar to 1.5 billion cubic meters per day, from the current 540 million cubic meters per day. Iran also says it will invest some $141 billion on new projects between 2005 and 2014. And the high price of oil is allowing it to finance much of that amount itself, with some $63 billion being provided internally, according to Counterpunch.com.
A look at the myriad projects now underway in Iran suggests that the impact of illegal US-led sanctions has been very limited. Several new greenfield refinery projects are underway, and the country will have enough domestic refining capacity by 2011 to enable it to curtail gasoline imports, which now average about 20 million liters per day, or almost one-third of the country’s total gasoline consumption.
Biggest Winner
The confidence that the Iranians displayed in Madrid is further confirmation of their growing influence in Europe and the Mideast. Indeed, their presence at the conference bolsters the belief that Iran may be the biggest winner of the Second Iraq War. And the oil and gas deals they are doing--with the Malaysians, Indonesians, Syrians, Venezuelans, Chinese, and others--provide evidence that America’s ability to influence global energy policy, particularly when it comes to policies that involve illegal sanctions against Iran, is diminishing.
S.R. Kassaei-Zadeh, managing director of the National Iranian Gas Company, reinforced that point in Madrid when he told Counterpunch that the long-discussed Iran-Pakistan-India gas pipeline deal is done.
Kassaei-Zadeh insisted that the prolonged pricing negotiations had been completed, and that the only remaining detail was to determine the line’s final route.
Nevertheless, the Iranians declared in Madrid that by 2025 they want to be the second-largest gas producer in the world, and claim a 10 percent share of the global gas trade, either through pipelines or liquefied natural gas.
While Nozari mentioned several other projects, including the growth in Iran’s LNG production capacity, he notably commented, “In our strategic gas export plan, we have allocated 150 million cubic meters per day for export to Europe via pipeline.“
Under US pressure, Europe has refused to strike a deal with the Iranians for gas supply, even though it is in the EU’s strategic interest to do so. Bargaining with Iran would give the Europeans some leverage with Russia, which currently has a near-monopoly on the EU’s future gas supply plans, or at least on any gas that would be moved via pipeline. By including the mention of gas for Europe, Nozari made it clear that the Iranians are open to doing business with the EU. It’s also worth noting that the title of the Iranians’ presentation was “Iran, Reliable Source of Energy Supply.“
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10 Power Plants to Go Private
Privatization of power plants will begin in two weeks, announced Energy Minister Parviz Fattah adding that all subsidiaries of the Ministry of Energy will be privatized by next March.
He further elaborated that 80 power plants will be handed over gradually to the private sector.
“At present, the privatization of 10 power plants is being finalized. We have completed our part of the process and it is now up to the Ministry of Economy and Finance and Iran’s Privatization Organization to decide about the rest,“ he told Mehr News Agency.
He explained that the private sector is constructing a number of power plants adding, “Currently the private sector generates 3000 MW of electricity.“
Meanwhile, the cabinet has approved 1,665 billion rials from Iran Power Development Company’s funds for developing Kashan’s combined cycle power plant.
Based on the approval of the government’s Economic Commission, the sum will be used to procure equipment for Kashan’s combined cycle power plant. This was notified to relevant authorities by the first vice president on July 9.
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First Shipping
Investment Company Planned
A shipping and shipbuilding investment company, the first in the country, is to be established by the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) to support and make maximum use of the capacity of domestic shipbuilding companies, disclosed IMIDRO managing director, Fars News Agency reported.
IMIDRO has prepared facilities and infrastructure for building ships during its one-decade support and investment in shipping industry bodies such as Arvandan, ISESCO and Sadra, Ahmad Qalehbani continued.
However, these capacities and investments have remained unused in the absence of legal support, failure to continue investment and less cooperation of shipping companies in ordering ships from domestic shipbuilders, Qalehbani regretted.
In conclusion, he said that the company will be established to take maximum advantage of legal and financial capacities for improving the shipbuilding industry, help it meet domestic demand and step into global markets.
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Petrochem Markets
Favorable
About $5.5 billion worth of petrochemical products have been exported since March, announced managing director of Petrochemical Commercial Company.
Mohammad Ali Zardbani added that thanks to efforts by the company’s management, sanctions against Iran had no negative impact on the export of petrochemical products, IRNA reported.
The sharp rise in oil prices has however resulted in an upsurge in the price of a number of petrochemical products including water and beverage bottles.
Floating prices of petrochemicals raised the company’s revenues from domestic sales by 10 percent.
Referring to the future of the petrochemical market, he predicted that the sale of ethylene products may encounter some problems but the urea and ammoniac market is favorable.
“We would face stiff competition, once the petrochemical projects in the Persian Gulf region become operational,“ Zardbani noted.
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Steel Prices Drop
By Sadeq Dehqan
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Policies have been adopted to provide financial facilities to private steel producers to enable them to buy raw materials.
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Sharp drop in global steel prices in July has had an impact on the domestic market. The drop in steel prices is taking place as domestic production is declining.
Power shortage in recent weeks has forced the government to reduce electricity supplies to some industries, including steel mills, in an effort to offset nationwide power failures. Continuation of this trend will influence steel production and prices in the coming months.
The situation is not just limited to Iran. Indian steel companies are on the verge of bankruptcy due to the slump in global prices. Also, the share price index of steel producing companies has recorded a sharp fall in Shanghai Stock Market.
Chairman of the State Steel Producers Association told Iran Daily that since raw materials for the steel industry are imported, global prices also have an impact on the domestic market.
Only state-run steel producers procure their raw materials from domestic sources, Taqi Bahrami-Noshahr pointed out. This is while, the private sector has to import all the materials it needs, he added.
China is among the major exporters, he said, noting that it sometimes resorts to large-scale purchases of the product. This creates an imbalance in supply-demand and leads to price fluctuations, he noted.
Annual demand for steel in Iran at 20 million tons. While steel production capacity stands at 20 million tons per year, only 13 million tons are produced, he complained.
The private sector also has the capacity to produce 10 million tons of steel whereas it only operates at 30 percent of its capacity, he pointed out.
Bahrami-Noshahr continued that the private sector has problems in procuring raw materials. Banks do not cooperate with private investors and do not provide them with appropriate financial facilities, he regretted.
Commerce minister recently said that policies have been adopted to provide financial facilities to private steel producers to enable them to buy raw materials, he stated.
Grounds have been created to grant loans to private steel producers and they will be paid in the coming weeks, the official added.
He underlined that in recent weeks, power shortage has led to a drop in the production of private mills.
Private steel factories face restriction in power use given that the Energy Ministry wants to maintain nationwide supply, he noted.
He said that the restriction began 12 days ago and will continue until next week, he said. However, the ministry may extend power restriction period which would lead to a drop in steel production.
Global steel production currently stands at about 1.3 billon tons, Bahrami-Noshahr observed.
If domestic steel producers cooperate in production, proper conditions will be created, he assured. Currently, private and state steel producers have good collaborations, the official said.
“Sometimes, several steel merchants decide to withhold supplies of steel products they have purchased. This will affect prices.“
At times, interviews and comments by senior officials about the steel industry and price hikes also influence the market and lead to fake prices, he opined.
Highlighting that the government also sometimes forces state steel- companies to sell below market prices, he said that the private sector and even government-affiliated companies withstand the worst of such measures. Even state steel giants like Mobarakeh Steel and Isfahan Steel are in the red, he stated.
Offering steel below the market price is also harmful for consumers since profiteers and middlemen purchase the product at lower prices and supply it to the market at higher rates, he added.
Bahrami-Noshahr continued that steel prices are real all over the world and nowhere subsidies are paid to middlemen. Only producers benefit from subsidies, he added.
Given the domestic demand, export of the product is low, the official underlined. Currently, exports are solely handled by the state sector.
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New Oil Field Discovered
Iran has discovered an oil field with in-place reserves of 525 million barrels, Oil Minister Gholam-Hossein Nozari was quoted as saying on Sunday.
The discovery was made near the southern port city of Assaluyeh, state broadcaster IRIB said, without giving further details.
“A few other oil fields have also been discovered about which the public will be informed in the coming weeks,“ Nozari said.
It came a week after Nozari announced the discovery of an oil field holding an estimated 233 million barrels of recoverable sweet oil and in-place reserves of 1.1 billion barrels in the oil-rich southwestern province of Khuzestan.
Iran, the second-largest producer of the Organisation of the Petroleum Exporting Countries (OPEC), two months ago put its oil reserves at around 136 billion barrels.
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Post Bank Assets at Rials 9 Trillion
Iran’s Post Bank has managed to meet its expanses by relying on its fixed revenues for the first time since it was established, said the bank’s managing director, Mahmoud Afzali.
He recalled that Post Bank began operations in January 1997 following the approval of its articles of association, ISNA wrote.
In a short period, it set up hundreds of branches and offices to facilitate banking services in cities and villages, he explained.
He pointed out that the total assets of Post Bank were valued at two trillion rials in March 2006. This figure rose to 5.5 trillion rials in the year to March 2007 reaching nine trillion rials in the year to March 2008, he added.
Banking facilities offered by Post Bank have also grown, Afzali disclosed. Currently, it has exceeded 4.6 trillion rials from 1.3 trillion rials in March 2006, he said, noting that this indicates a growth of over 3.5 times.
According to him, about 92 percent of the facilities paid to customers are below 100 million rials.
Earlier, Afzali said that the bank’s clients can receive all kinds of financial services online, adding that they can also purchase goods on the Internet from their Post Bank account.
He said the 24-hour service marks a turning point in efforts to materialize the objectives of electronic banking.
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New IKCO Models
Iran Khodro Company will market 11 new models in the next four years,
said the company’s CEO, Manouchehr Manteqi.
NIORDC Sales at $47b
Iranian refineries sold products worth $47 billion in the year to March 2008,
National Iranian Oil Refining and Distribution Company’s deputy director for refining affairs, Aminollah Eskandari said.
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WTO Wants More Liberalization
The shortcomings of globalization must be amended by more globalization, according to the World Trade Report 2008, released by the World Trade Organisation (WTO).
In its report titled ’Trade in a Globalizing World’, the WTO recommends pursuing more open markets balanced by complementary domestic policies, a tacit recognition of a role for the state, “along with international initiatives to manage the risks arising from globalization.“
The combination of trade and globalization, leading to greater integration and economic interdependency between countries, has made a significant contribution to bettering the lives of many millions of people around the world, WTO Director-General Pascal Lamy told Ipsnews.net.
But the benefits of greater integration and interdependency have not reached everyone, Lamy acknowledged. “There are those that are excluded and left behind,“ he said.
For that reason, deeper integration into the world economy has not always proved popular. As a consequence, trade scepticism is on the rise in certain quarters, the report admits.
This is the global context for a decisive phase of the Doha Round of world trade negotiations, launched in November 2001 to lower trade barriers between countries and free up markets.
The talks have frequently been on the verge of a breakdown, mainly due to divergences of interests between industrialized countries and developing nations. This week a crucial debate will be held with the participation of ministers from some 35 or 40 countries, out of the 153 members of the WTO.
German Economic Recovery to End
Next year will mark the end of the economic recovery in Germany, the head of the Cologne Institute for Business Research said.
“The creation of work which has allowed the fall in unemployment for nearly two million people since the start of 2005 is coming to an end,“ wrote the institute’s director Michael Huther in an article in Bild am Sonntag, Todayonline reported.
“In 2009, little new employment will be created, unemployment is going to stagnate,“ he added.
Huther, who expects economic growth of around one percent in 2009, called for tax cuts to strengthen economic competitiveness and moderate salary agreements.
German Finance Minister Peer Steinbruck, meanwhile, said he expects “obviously a weakening“ of the economic climate next year.
But “we are not in a situation in which we have to develop crisis scenarios,“ he said.
ECB Fight Against Inflation Dreary
The European Central Bank is trying to convince people in the eurozone that taking a tough stand on inflation will get them through lean economic times, arguing that long-term gains warrant short-term pain.
“There is a particular need to speak to citizens on inflation and monetary policy right now,“ Natixis economist Sylvain Broyer said after ECB President Jean-Claude Trichet laid out the bank’s stance in an interview with four major eurozone newspapers, the Economic Times wrote.
Public opinion is emerging as key ground to be won since the bank raised its main lending rate despite signs that economic activity was slowing sharply in the 15-nation eurozone.
Politicians have urged the ECB to ease policies that determine credit conditions for around 320 million people, though they know its main goal is to keep inflation, which hit a record 4.0 percent last month, in check.
The ECB argues that sustainable growth is best served by making sure people know the bank will target inflation of just below 2.0 percent, even if that means letting the economy contract for some months.
“So far it’s been easy,“ commented Bank of America economist Gilles Moec, pointing to low interest rates a few years ago when many questioned whether inflation had finally been beaten.
China Economy to Boom After Olympics
China’s robust economy is unlikely to hit the skids after the Olympics, unlike most host nations who have endured post-Games downturns, experts say.
All but one host of the Games over the past five decades have been hit by economic pitfalls once the Olympic flame has gone out, AFP wrote.
But that will not happen to China, said Fan Gang, an advisor to the Chinese government and director of the National Economic Research Institute, a non-government think tank at the China Reform Foundation.
“Personally, I feel very optimistic that the Chinese economy after the Beijing Olympics will continue to grow rapidly and healthily,“ he said.
Most Olympic host cities suffer a fall off of investment and a slowdown in gross domestic product once the Games end and the reality of footing the bill for the world’s biggest sporting extravaganza sinks in.
“Of the 11 cases we examined since 1956, only the US (Atlanta) in 1996 did not show a slowdown following the Olympics,“ investment banker Morgan Stanley said in a recent report.
A key factor in post-Olympic economic performance is the size of the country and the share of the economic pie held by the host city, the report said.
Growth Performance Robust
Iran’s growth performance has been robust in recent years, benefiting from high oil prices, regional growth, and a strong policy stimulus, the International Monetary Fund (IMF) said.
Iran’s economy is expected to slow in 2008-2009 to 5.7 percent from 6.6 percent last year, but the overall prospects for the economy are good, the IMF said.
The soaring growth is accompanied by high inflation. The IMF said inflation in Iran rose to 24.2 percent in April, up from 16.8 percent in April 2007 and would likely remain at around 25 percent in the near term. The IMF urged Tehran to raise interest rates and take other policy measures to contain inflation.
Behind the surging economy and inflation are fiscal and monetary policy stimuli. The IMF welcomed the economic growth but encouraged the nation to prevent inflationary expectations. “IMF directors welcomed the Iranian authorities’ plans for far-reaching fiscal reforms and looked forward to their implementation,“ the IMF said.
“The country’s external position has strengthened, reflecting the impact of higher oil prices. However, inflation is rising, largely due to the expansionary policy stance and also, in part, to higher import prices,“ it added.
Iran’s Central Bank has proposed raising rates to three percentage points above inflation to curb prices, while an economic committee responsible for setting rates has proposed 14 percent or less. The IMF also said that introducing more flexibility in the exchange rate--by allowing market forces to play a bigger role in determining the currency’s value--would help lower inflation. Over the long term, restraining government spending will also be needed to reduce inflationary pressures, it said.
According to the IMF, money supply growth in the economy was relatively high amid lower rates, pressures on commercial banks to expand credit and “unsterilised“ purchases of foreign exchange by the Central Bank.
German Commercial Ties to Expand
Ways of expanding commercial cooperation between Iran and Germany were explored during a recent visit by an Iranian delegation to Berlin, said the chairman of Iran Chamber of Commerce, Industries and Mines.
Mohammad Nahavandian noted that setting up an Iranian trade center in Germany and forming a joint economic committee of the two countries were among the decision taken during the visit, IRNA reported.
Nahavandian said that the new privatization strategy of Iran’s government has provided new investment opportunities and prompted officials to boost trade ties.
He said that Iranian and German economic and commercial sectors will ask political officials to hold serious negotiations to resolve the problems created by sanctions against Iran.
Implementation of Article 44 of the Constitution, which seeks large-scale privatization, has paved the way for the private sector to become involved in new economic activities, and German companies should be informed of this, he concluded.
Bank Sarmayeh to Set Up Dutch Branch
Bank Sarmayeh, a private Iranian bank, is planning to establish a branch in the Netherlands, the bank’s managing director announced.
“Our new branch will be registered in the Netherlands and operate under the Dutch banking and monetary laws,“ Baha’eddin Hosseini Hashemi said.
He further said that Sarmayeh has bought a 50-percent stake in a Tajik bank, adding that the new joint bank will begin operations in the next three months.
Bank Sarmayeh, which is one of Iran’s six private banks, was established in 2005.
Its total revenues in the last fiscal year stood at 1.3 trillion rials ($144 million), Hashemi was quoted by Fars News Agency as saying.
The report to the bank’s latest general assembly put its profits for the last Iranian year (ended March 19, 2008) at 486 billion rials ($53 million).
Interest in Ecuador Refinery
China and Iran are interested in investing in a six-billion-dollar oil refinery Ecuador is building with Venezuelan help on the Pacific coast, President Rafael Correa said Saturday.
“That refinery is being built with (Venezuela’s state giant) PDVSA although Iran and China are also interested,“ the Ecuadoran leader said in his weekly television address.
The megaplant on the coast, on which Correa and his Venezuelan counterpart Hugo Chavez broke ground Wednesday, will be on line fully in 2013 and will be able to produce 300,000 barrels of oil per day.
Correa said Iran could be involved and shrugged off any cause for concern, AFP reported.
“Iran has a lot of experience in the oil field, it has been a producer for a long time, almost a century, and China is the leading oil consumer, so we will have a guaranteed market,“ said Correa.
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