News ID: 214663
Published: 0259 GMT May 07, 2018

Former NIOC official calls for reducing reliance on petrodollars to counter US sanctions

Former NIOC official calls for reducing reliance on petrodollars to counter US sanctions

By Heshmatollah Razavi

Prior to the conclusion of the Joint Comprehensive Plan of Action (JCPOA) between Tehran and the major world powers in July 2015, anti-Iran sanctions mainly targeted the Islamic Republic's oil exports. The sanctions were aimed at depriving the country of its considerable oil revenues.

Based on the deal, the sanctions were lifted in January 2016. But more than two years after the removal of these sanctions, US President Donald Trump is making his final decision on Washington's withdrawal from the deal.

Mohammad Ali Khatibi, who served as the director for international affairs at the National Iranian Oil Company (NIOC), amid tight anti-Iran sanctions, played a major role in dealing with the penalties.

Khatibi, who also served as Iran's representative to the Organization of the Petroleum Exporting Countries (OPEC) and Iran's representative at Gas Exporting Countries Forum as well as the International Energy Agency, believes Tehran should do its best to wean the national economy off petrodollars to cushion the blow of sanctions on its oil industry.

Freelance journalist Heshmatollah Razavi conducted an interview with Khatibi.

Excerpts of the interview follow:


HESHMATOLLAH RAZAVI: When were you appointed the director for international affairs of the National Iranian Oil Company?

MOHAMMAD ALI KHATIBI: I was appointed as NIOC's director for international affairs in 2011 when tough sanctions were being imposed on Iran. There were special conditions during that period since the sanctions had adversely impacted oil exports. In 2011, Iran's oil exports fell by up to 500,000 barrels per day.


Why did oil exports see such a drastic fall?

Apart from sanctions imposed on Iran's banking sector and its oil, global shipping insurers refused to provide insurance coverage for Iranian oil exports. This dissuaded customers from purchasing oil from Iran.


As NIOC's director for international affairs, what did you do to deal with such paralyzing sanctions?

Iran's enemies sought to freeze oil exports to intensify political pressure on the country. When I assumed the helm, I drew up plans to prevent the fall in oil exports. Such plans bore fruit and our oil exports once again rose.


How did you do so?

We took insurance risks in the shipping transport sector. This encouraged those who enjoyed waivers to purchase Iran's oil. Hence, exports jumped to one million barrels per day. This also helped stabilize the forex market following a 300 percent fall in the value of the Iranian currency, the rial, against the dollar.


But banking sanctions were a stumbling block against transferring petrodollars to the country, weren't they?

This is true. But we managed to adopt strategies to transfer some parts of oil revenues to the country. After the JCPOA was signed, the Iranian government was able to receive the rest of these petrodollars.


Do you believe that the JCPOA was a major achievement for Iran?

Undoubtedly, the JCPOA helped ease pressures on the Islamic Republic. It positively impacted the shipping sector, insurance and the transfer of money to the country. But it has not fulfilled all expectations.


Donald Trump is to decide in the next few days whether to issue new waivers on Iran sanctions or to withdraw Washington from the nuclear deal. What are his purposes?

The US wants to push Iran to halt its missile activities and contain the Islamic Republic's influence in the region. Hence, Washington seeks to undermine Iran's oil exports as a means to achieve his goals. Hence, we should make all-out efforts to reduce dependence on petrodollars.


Is it possible to do so in a short period of time?

Of course not. We should try to reduce dependence on oil revenues gradually. Such revenues must be spent on development projects, investment the renovation of industries instead of on current budget.

Likewise, we should not focus on exporting unprocessed crude oil. We need to process oil into byproducts to reduce the risks of sanctions on the oil industry. Selling crude oil leaves us vulnerable to the threats of sanctions. As a result, we should spare no efforts to pursue plans to wean the economy off oil revenues.

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