Iran became an Islamic republic in 1979, following the revolution.
The constitution provides for a religious leader, the Supreme Leader, appointed by an Assembly of Experts, and a President, the head of government, elected every four years for a maximum of two terms. The Supreme Leader is Ayatollah Ali Khamenei. A new president, Mr Mahmoud Ahmadi Nejad, took the oath of office in August 2005 after he won 62% of the vote in the presidential election in which there was a 60% turnout.
A 290 member Majlis, or parliament, passes legislation, which must be approved by the Guardian Council, an appointed body of clergy and legal experts. In the event that the Majlis and Guardian Council do not agree another body, the Expediency Council, determines the disputed aspects of legislation. In recent times, disputes have largely been about the extent and pace of modernisation.
The constitution guides the administration of economic and financial affairs of Iran and envisages the state, cooperative and private sectors of the economy. The private sector is growing. About a quarter of the private sector is controlled by religious charitable foundations, first established in 1980 to supervise the deposed Shah’s assets.
The government programme has been one of reform: greater openness and accountability of government, individual freedom under the law and more press freedom. The Third Five-Year Plan (2000–2004) aimed to reduce the government role in the economy by, for example, allowing private investment in certain sectors such as mining and financial services. The environment for foreign investors was improved when the Law for Promotion and Protection of Foreign Investments was passed in June 2002. The Fifth Five-Year Plan (2005-2009) has ambitious targets for the development of the energy and minerals sectors, the renovation and modernisation of Iranian industry and the development of non-oil exports.
President - Mahmoud Ahmadinejad. First Vice-President - Dr Parviz Dawoodi. Executive Vice-President - Dr Ali Saiedlou.
Ministers:
1. Manouchehr Mottaki – Minster of Foreign Affairs
2. Dawood Danesh-Jafari – Minister of Economy and Finance
3. Mohammad Rahmati – Minister of Road and Transport
4. Mostafa Pour Mohamadi – Minister of Interior
5. Gholam Hussain Mohseni Ajehie – Minister of Information
6. Jamal Karimrad – Minister of Justice
7. Mohammad Reza Eskandari – Minister of Agriculture
8. Mohammad Sulaimani – Minister of Communication & I.T.
9. Parviz Fatah – Minister of Energy
10. Mohammad Mostafa Najjar – Minister of Defence
11. Mohammad Hussain Safar Harandi – Minister of
Education & Guidance
12. Saeed Masoud Mir-Kazemi – Minister of Commerce
13. Ali-Akbar Mehrabian – Minister of Industries & Mines
14. Mohammad Mehdi Zahedi – Minister of Higher Education
15. Karmran Baghari Lankarani – Minister of Health
16. Mohammad Saeedi Keya – Minister of Housing
17. Saed Mohammad Jahrami – Minister of Labour & Social Services
18. Gholam-Hossein Nozari - Minister of Petroleum
Manouchehr Mottaki – Minster of Foreign Affairs
Mr Motaki was born 1953 in Gaz, Iran. He graduated in 1980 from Bangalore University, India. In 1990 he obtained his degree in International Public Relations at Tehran University. He has been: a Member of Parliament in the 7th term; Deputy Minister of Foreign Affairs; Iranian Ambassador in Turkey; Director General of Western Europe Foreign Office; Deputy Minister of Foreign Office for International Affairs; Deputy Minister of Legal Consulate and Parliamentary Affairs; Iranian Ambassador in Japan; Advisor to the Minister of the Foreign Office for International Affairs; recently a Member of Parliament and Head of International Affairs at the National Security Committee.
Mohammad Reza Bagheri, Vice Minister for Arab States & Africa. Mehdi Safari, Vice Minister for Asia & Far East. Saied Jalili, Vice Minister for EU & America.
Dawood Danesh-Jafari – Minister of Economy and Finance
Born in 1954 in Tehran, Mr Danesh-Jafari graduated from Kashmir University, India in Development Engineering. In 1992 he graduated in Economics, and in 2001 he obtained a PHD from Tabatabae, Iran. He was the expert on Tehran Developments for the government, a Member of Parliament in the 5th term and is currently an MP in the 7th term.
Mohammad Rahmati – Minister of Road and Transport
Born in 1958 in Yazd, Iran, Mr Rahmati graduated from Sharif University in Development Engineering and also as an Expert in Construction and Development at the University of Tehran. He was a Member of Board and acting MD of Iran Railway Company, MD of Iranian Railway, Deputy Minister of Road and Transportation for Roads.
Mostafa Pour Mohamadi – Minister of Interior
Born in 1959 in Qom, Mr Mohmadi was educated in Islamic Studies in Qom, Mashad and Tehran. His graduation is the equivalent of a PHD. He was then a public prosecutor in court in Khuzestan, Bandar Abas, Kerman Shah and Mashad, prosecutor general in the West of Iran, Director of Foreign Intelligence, Head of Political Affairs of the Leader’s office and Deputy Minister at the Ministry of Information.
Gholam Hussain Mohseni Ajehie – Minister of Information
Born in 1956 in Ageyeh (Esfehan), Mr Mohseni Ajehie completed his education in Qom and then joined the Ministry of Information, he was then representative of the Judiciary in the Ministry of Information. He was responsible for Economic Affairs in the Public Prosecutors Office.
Jamal Karimrad – Minister of Justice
Born in 1956 in Qazvin, Mr Karimi Rad obtained a degree in Law at the College of Law; he is an expert in International Law at Tehran University. He was General Prosecutor in Kurdistan, General Prosecutor of Zanjan and Qazvin, Director General of Zanjan Judiciary office and spokesman of the Judiciary Department of Iran.
Mohammad Reza Eskandari – Minister of Agriculture
Born in 1959 in Ahwaz, Mr Eskandari graduated as Agriculture Engineer form Chamran University in Ahwaz. He has responsible for Agriculture Development Committee in Khuzestan and Advisor to the Minister of Agriculture.
Mohammad Sulaimani – Minister of Communication & I.T.
Born in 1954 in Fars, Mr Sulaimani obtained a PHD in Communications and Electronic High Frequency from the University of Pierre Marie Curie in Paris. In Iran he was Deputy Minister of Higher Education in IT Research, President of University of Industry and Education and Head of Research for Electronics in Iran electronic industry.
Parviz Fatah – Minister of Energy
Born in 1961 in Oromieh, Mr Fatah was educated as Development Engineer in ‘Shareef Industrial’ university and then obtained his ‘High Expert in Industry’ degree from the Ministry of Imam Hussein. His background is focused in the Revolutionary Guard and he was also Project Manager of Karkheh and Gatvand Dams.
Mohammad Mostafa Najjar – Minister of Defence
Born in 1956 in Tehran, Mr Najar graduated in Mechanical Engineering from Tousi University. He had several positions with the Revolutionary Guard and was responsible for central teaching and treatment at the Revolutionary Guard Hospital.
Mohammad Hussain Safar Harandi – Minister of
Education & Guidance
Born in 1953 in Tehran, Mr Harrandi is a Graduate in Civil Engineering from University of Industry & Education. He held several high positions with the Revolutionary Guard and was with Iran National News Agency, he was also the editor of Keyhan Newspaper.
Saeed Masoud Mir-Kazemi – Minister of Commerce
Born in 1960 in Tehran, Mr Mir-Kazemi graduated in Industrial Engineering from the University of Industry and Education in Tehran. He obtained a PHD in Industrial Engineering from the University of Modares. He was the Deputy President of Technical Research of Engineering at Iman Hussain University. He was an advisor to the Minister of Defence and President of Shahid University.
Ali Reza Tahmasebi – Minister of Industries & Mines
Born in 1961 in Sheraz, Mr Tahmasebi graduated as Mechanical Engineer in Sheraz University and was awarded a PHD in Mechanical Engineering from Lavell University in Canada. He held several high positions with the Revolutionary Guard, was the Industrial Advisor for transfer of Technology at the Ministry of Oil. He was also an advisor for advance industry and Acting Minister of Industry & Mines, Member of Board of Special Zone of Electronics, Sheraz Project, Manager of two important projects of Iran Khudrow & Saipa Car Industries. Served several positions in the Ministry of Petroleum, Gas & Petro-chemicals.
Mohammad Mehdi Zahedi – Minister of Higher Education
Born in 1954, Mr Zahedi was the Head of Kerman City Council and Board Member of Shahdi Bahonar University of Kerman. After graduating in Mathematics from Esfehan University, he was elected by Cambridge International Centre as ‘Man of Knowledge’, his name was also on the list of the leading mathematics personalities produced by the Institute of Mathematics in the USA in 1998 and 2002. He also had the position of Head of Education Department of the City of Babak.
Karmran Baghari Lankarani – Minister of Health
Born in 1965, Tehran, Dr Lankarani graduated as an General Practitioner at the Shiraz University and served as Doctor in Shiraz hospitals, he was the head of Namazi Hospital, Shiraz and a member of management team at ‘Shiraz Medical Association’ in Shiraz.
Mohammad Saeedi Keya – Minister of Housing
Born in 1946 in Esfahan, Mr Saeedi Keya studied Civil Engineering in University of Amir Kabir of Tehran. He was responsible for the upkeep of state roads, co-ordinating of road and transportation between states, advisor to the President in the Housing Foundation, responsible for the college of railway engineering.
Saed Mohammad Jahrami – Minister of Labour & Social Services
Born in 1958 in Tehran, Mr Jahrami obtained a PHD in Strategic Management. He was the governor of the City of Noor, acting head of governor’s office - Amol, and governor general of Zanjan, Loristan and Simnan regions. He was also Deputy of Guardian Council for Elections and Board Member of Medical University of Sheraz.
Kazem Vaziri Hamaneh – Minister of Petroleum
Mr Vaziri spent his career with the Ministry of Oil, he has a degree in Mechanical Engineering and was Deputy Minister of co-ordination at the Ministry. He has now taken his current position at the age of 60.
Mr Nejad Hussainian - Deputy Minister, International & Head of Caspian Sea Projects
Mr Nouzari - Deputy Minister and Managing Director NIOC (National Iranian Oil Co.)
Mr Kazaee - Deputy Minister and Managing Director NIGC (National Iranian Gas Co.)
Mr Nematzadeh - Deputy Minister and Managing Director Refine and Distribution
Dr Moazami - Deputy Minister - Human Resources
Dr Zaree - Deputy Minister - Energy Study Centre
Mr Ebrahimi - Deputy Minister and Managing Director NPC (National Petrochemical Co)
Mr Haidar Kard Zanganeh - Director General, Privatisation, Ministry of Economy & Finance
ALI ASGAR FANI – ACTING MINISTER OF EDUCATION
The Minister of Cooperatives to be appointed.
The Minister of Welfare to be appointed.
Oil
Iran relies heavily on oil exports. About 75% of export income derives from the sale of oil and half the government budget is represented by oil sales. Oil income has grown rapidly in recent years from US$32 billion in 2004 to US$50 billion in 2006. The development of the sector is constrained by US sanctions which prohibit American companies from developments in the oil sector.
The Ministry of Petroleum (MoP), which has overall responsibility for the energy sector, has four autonomous subsidiaries reporting to it:
• National Iranian Oil Company (NIOC) for oil and gas exploration, production and oil transport.
• National Iranian Gas Company (NIGC) for gathering treating, processing, transmission, distribution and export of gas and gas liquids.
• National Iranian Petrochemical Company (NPC) for petrochemical production, distribution and exports.
• National Iranian oil Refining and Distribution Company (NIORDC)
Other national oil sector companies include:
• National Iranian Offshore oil Company (IOOC) manages offshore oil fields in the Persian Gulf.
• National Iranian South Oil Fields Company (NIOC South) manages onshore oilfields in southern Iran.
• Pars Oil and gas Company (POGC) is responsible for offshore North and South Pars gas fields.
• Khazar Exploration & Production Company is responsible for the Caspian Sea developments.
• National Iranian Tanker Company (NITC) manages Iran’s tanker fleet.
Iran has 132.5 billion barrels of proven oil reserves - that is about 10% of world proven reserves. The majority of the reserves are in huge onshore fields in Khuzestan province in south west Iran.
There are 40 producing fields – 27 onshore and 13 offshore – producing generally medium sulphur crude. Although, in 1974, production was 6 million bbl/d, total production now is about 4.1 million bbl/d, about 5% of world production, although sustainable production is thought to be 3.8 million bbl/d. Domestic consumption, which is growing rapidly, is some 1.5 million bbl/d. The target is to increase production to 4.6 million bbl/d by 2010.
Existing fields, which have natural decline rates of 8% onshore and 10% offshore, need upgrading and enhanced oil recovery techniques (EOR) are needed. Current recovery rates are about 25%, compared with a world average of 35%. Iran also needs to increase the search for new oil and 17 blocks have been tendered. Sufficient investment could significantly increase capacity.
60% of exports go to OECD countries.
Regional priorities have led to a programme of oil swaps. Caspian oil (mainly from Turkmenistan and Kazakhstan) is delivered to northern Iran, through the port of Neka, and Iranian oil is exported through Persian Gulf terminals. In 2006, swaps amounted to over 120,000 bbl/d; 40,000 bbl/d going to Tehran and the balance to Tebriz. The present pipeline capacity to Tehran is 180,000 bbl/d and there are plans to approximately double then triple this. In 2005, an Iran/Iraq MoU envisaged swap arrangements and the construction of a 24 mile, 350,000 bbl/d oil pipe line from Basra to the Abadan refinery. The swap would be Iraqi oil for Iranian refined products; also Iraq could export oil through Kharg Island and import refined products through Bandar Mahshahr. The difficulties with this agreement relate to the inability of Abadan to refine significant quantities of Basrah Light and the shortfall in Iran’s domestic gasoline supplies.
Exports are through four main terminals: Kharg Island (the largest), Lavan Island, Sirri Island and Ras Bahregan. Refined products are exported through Abadan and Bandar Mahshahr. The damage to these terminals in the war with Iraq has been fully repaired.
Through NITC, Iran operates OPEC’s largest tanker fleet, some 29 vessels, including Very Large Crude Carriers (VLCCs).
NIOC’s onshore field development concentrates on sustaining output levels from large ageing fields through EOR projects: over half or Iran’s oil production comes from fields which are more than 40 years old.
The Azadegan field, the largest discovery for many years, was made in 1999: it is estimated to have 26 billion barrels of crude. In 2004, Inpex of Japan was given a 75% stake in concession for its US$2 billion development: the stake was reduced to 10% two years later for lack of progress. Iran expects to start production at 20,000 bbl/d in 2007, which is planned to increase to 260,000 bbl/d by 2012.
In 2001 NIOC discovered a similarly large field, called Dasht-e-Abadan. Other NIOC discoveries include Darkhovin onshore filed, near Abadan, which is being developed by ENI through a US$1 billion buy-back contract. ENI started pumping 55,000 bbl/d in 2005 and expects to have reached 160,000 bbl/d by the end of 2007.
Another discovery is the Anaran field in Western Iran which was discovered by Norsk Hydro: it contains reserves of 2 billion barrels. It could produce more than 10,000 bbl/d of oil starting in 2010, although development is complicated by the need to clear mines. Lukoil is a minority partner.
Yet another large development prospect is the Yardavaran field, which has reserves of up to 17 billion barrels. It is to be developed with foreign partners: Sinopec (51%) and OVL of India (20%).
The largest crude oil storage facility is at Kharg Island with a capacity of 12 million barrels, where an expansion programme to 22 million barrels has begun. There are a number of smaller storage tanks around the country.
The Iranian constitution prohibits the granting of petroleum rights through concessions or direct equity basis to foreign companies, but permits foreign involvement through Buyback contracts.
Buybacks are arrangements by which the foreign entity funds field investments and is remunerated in the form of an allocated production share. Field operations are returned to NIOC after a stipulated number of years, at which point the contract is terminated. The first major Buybacks became operational in 1998 and 1999 for the Sirri A and E fields, where Total is the operator. Total and ENI were operators of two other fields, Doroud and Balal. Some NIOC subsidiaries have been awarded Buyback contracts. Cepsa and OMV withdrew from the Cheshmeh-Khosh contract because of disagreement over development costs and Buyback terms.
Buyback has disadvantages for both sides. NIOC bears the risk if oil prices are low, because it must sell more oil to meet the agreed rates of return (usually between 15-18%) for developers. The developers have no guarantee that they will be permitted to develop and operate discoveries and the short terms of the contracts are consider unfavourable. In recent years the term of contracts has been increased somewhat, but no significant reform of the system has occurred.
Foreign involvement in the development of the oil sector has reduced and slowed since 2006 as a result of the extraterritorial effects of US sanctions law on non-American oil and financial sector companies.
The bulk of off-shore production is in Doroud 1&2, Salman, Abuzar, Foroozan and Sirri fields; all of which are being extended. Since 2002 Shell has been developing the Soroush-Nowruz field, near Kharg Island, with estimated recoverable reserves of 1 billion barrels of heavy oil. Difficult to market, some of this oil is blended with South Pars condensate for domestic consumption.
The Caspian Sea represents a potential for off-shore development, but no agreement has been reached between the littoral states. Iran wants either the sea to be used in common or it to be divided equally: the other states favour an equidistant method of dividing the seabed, which would give Iran 12% of the Sea.
Iran has a combined refinery capacity of 1.64 million bbl/d: major refineries are located at, Abadan, Isfahan, Bandar Abbas, Tehran, Arak and Tabriz. Iran plans to expand refinery capacity to 2.54 million bbl/d by 2010 because of the strong growth in gasoline demand. Expanded facilities will allow refining of heavy crudes typical Iran’s production.
Gasoline has been importing refined products since 1982, but presently imports around a third of requirements. Gasoline is heavily subsidised by government and demand has grown strongly over many years. In June 2007, gasoline rationing was introduced to contain the subsidy. The introduction was chaotic with technical difficulties and no arrangements for the supply of excess requirements: rioting and petrol station burning occurred.
Natural Gas
Iran has an estimated 970 trillion cubic feet (Tcf) of proven natural gas reserves – the world’s second largest reserves after Russia. 62% of reserves are in non-associated fields and have not been developed: the major fields are, South Pars (by far the largest with 280-500 Tcf), North Pars and Kangan-Nar. Iran has stopped drilling in the Dorra natural gas field as a result of a border dispute with Kuwait and Saudi Arabia.
In 2005, had marketed production of 3.5 Tcf and consumed 3.6 Tcf of gas. Natural gas accounts for almost half of Iran’s total domestic energy consumption. However the price of gas is controlled and subsidized to residential and industrial consumers. Although domestic demand is growing rapidly, Iran has the potential to be a significant exporter.
Iran’s largest energy project is the development of the South Pars natural gas field, which was first discovered in 1988 and is an extension of Qatar’s 900 Tcf North Field. In addition to gas the field contains some 17 billion barrels of liquid reserves. The MoP estimates that earnings from South Pars could be as much as US$11 billion per year over 30 years. Although it has attracted some US$15 billion of investment interest, development has been delayed by technical matters (high sulphur content), contractual negotiations (controversy over Buyback terms) and international politics (the nuclear dispute). By 2006 Phases 1-5 were on-stream producing 3.2 Bcf/d of natural gas. A further five phases are due on-stream in 2007 with combined output of 10 Bcf/d. The government aims for 16 Phases to be on-stream by 2010 in order to keep pace with Qatari exploitation, which could run down the reserve base. Development of the various phases could allow marketed natural gas targets of 28.2 Bcf/d to be reached by 2010. One use for production will be reinjection.
Presently South Pars condensate production is 200,000 bbl/d and is forecast to be 500,000 bbl/d by 2010. One forecast estimates that by 2015, 1 million bbl/d will be produced from South Pars Phases 1-14.
The South Pars development plan is phased as follows.
Phase 1. Developed by Petropars, came on-stream in 2004, it produces 900 Mmcf/d of natural gas for domestic consumption, plus 45,000 bbl/d of condensate.
Phase 2 & 3. Developed by a Total-led consortium at a cost of approximately US$2 billion, came on stream in 2002, it produces 2.8 Bcf/d of gas (carried by undersea pipeline to Asaluyeh), plus 80,000 bbl/d of condensate.
Phase 4 & 5. Developed by Eni and Petropars at a cost of US$1.9 billion (including onshore treatment facilities at Bandar Asaluyeh), came on-stream in 2004 and expected to produce 2 Bcf/d of natural gas, 80,000 bbl/d of condensate, plus ethane, sulphur, LPG and petrochemicals.
Phases 6 & 8. Developed by Petropars and Statoil at accost of some US$2.7 billion, came on-stream in 2007, expected to produce 3.9 Bcf/d of gas and 150,000 of condensate. Completion was delayed because of platform and pipeline construction delays.
Phases 9 & 10. Being developed by LG Engineering and Construction Corp (South Korea) was expected to come on-stream in 2007 (but is now some one and a half years behind schedule) and to supply 2 Bcf/d of natural gas and 80,000 bbl/d of condensates. In June MoP contracted IRGC to build the IGAT-7 pipeline, which will take Phases 9 & 10 gas from the field to Assaluyeh, Iranshahr and beyond
Phase 11. In 2004 Total was selected to enter final negotiations on the US$1.2 billion project intended to produce 2 Bcf/d of natural gas and 80,000 bbl/d of condensates for LNG export on a Buyback contract. CNPC and ONGC are interested in a share of the project.
Phase 12. In 2006 Petropars was awarded the development contract. The structure has 3 Bcf/d of total production for domestic use and 2 Bcf/d for a potential LNG and 120,000 bbl/d of condensate.
Phase 13. In 2005 a Buyback contract was signed with Royal Dutch Shell (with Repsol as consortium partner) for 2 Bcf/d of gas for LNG export. Following preliminary work, the final investment decision has still to be made.
Phase 14. This is intended to be a gas-to-liquids (GTL) project in which Shell and Statoil have expressed interest.
Phases 15 & 16. To be developed by Gorb, an Iranian engineering company, at an estimated cost of some US$2 billion with the expectation of producing 2 Bcf/d of natural gas for domestic use, 133 Mcf/d for LNG export and 80,000 bbl/d of condensate.
Phases 17 & 18. Expect to produce 2 Bcf/d of natural gas for domestic use. A service contact has been awarded to three Iranian companies: IDRO (43%), OIEC (25%) and IOEC (32%). The Economy Council has agreed that the Oil Surplus Fund can be used to fund the project.
Phases 19 -22. Tenders have been released. Estimated output is some 3.5 Bcf/d of natural gas for domestic use. Costs are estimated to be in the region of US$3 billion.
Since 2006 the US Administration has renewed efforts to obtain compliance from foreign oil and financial sector companies with US sanctions legislation. This has led foreign companies to withdraw from South Pars developments or to delay further investment and foreign finance to become unavailable. Iran has turned more to its own resources preferring Iranian investors and engineering companies and to moot the establishment of a Pars Investment Fund for the sale of US$3.5 billion of Participation Bonds to fund South pars developments.
Furthermore there is strong competition for LNG customers. Other suppliers, for example Oman, Qatar and UAE, are ahead in contracting with Far Eastern buyers. Also US sanctions limit Iran to non-US liquefaction technology furthermore presently Iran has no LNG facilities.
However potential customers for Iran’s natural gas include: Ukraine, Europe, Bahrain, India, Pakistan, Armenia, Azerbaijan, Georgia, Taiwan, South Korea and China. Exports could be either by pipeline or LNG tanker with possible LNG export terminals at Asaluyeh or Kish.
In 2002, Iran and Turkey inaugurated a pipeline link between the two countries. Exports of Iranian gas are planned to reach 960 Bcf/d by the end of 2007 although there have been interruptions in supply and there are doubts that Turkish demand will grow quickly enough to absorb such an amount as it has purchase commitments with Russia, Algeria and Nigeria in addition.
Iran would like to use the Turkish pipeline to sell gas to Europe and Turkey would like a joint marketing company for this purpose. However there are number of options for the pipeline route beyond Turkey, with difficult issues to resolve.
One of the routes for the pipeline to Europe could have come as result of the signature of a MoU between Austria’s OMV and NIGC, in January 2004, regarding the proposed US$5 billion Nabucco natural gas pipeline through Turkey to Austria, bypassing Russia. Subsequent discussions were held with gas companies in Bulgaria, Romania, Turkey and Hungary. However an agreement signed in 2006 between Gazprom and MOL, the Hungarian party to Nabucco, for the supply of Russian gas to Europe and another agreement with OMV looks to have undermined Nabucco.
In 2007 the Iran- Armenia pipeline came on-stream for the sale of 1.3 Tcf of natural gas to Armenia over 20 years.
In October 2004, Iran signed a U$100 billion 25 year contract with Sinopec for the production and export of LNG to China. In 2007, Petro China signed an agreement with NIGC for purchase of 3million tonnes of LNG over 25 years starting in 2011.
Agreement between India, Pakistan and Iran looks nearer on the US$3 billion 25 year IPI pipeline for the export of gas to India through Pakistan, because political tensions between India and Pakistan have eased and reportedly a gas price ofUS$5.46 million BTUs has been agreed. This price is lower than the existing price paid by Turkey to Iran and other international prices.
Natural gas is also imported from Turkmenistan by pipeline to satisfy the needs of northern Iran.
Mines & Minerals
Iran has huge (in the top ten in the world), largely untapped, mineral resources in: lead, copper, gold, manganese, uranium, chromium, antimony, tin, mica, alum, marble, turquoise, and emeralds. Also fireclay, chalk, lime, gypsum, ochre and kaolin are produced. Mining is largely Iranian owned, but some joint ventures with foreign companies are proceeding, for example, in gold mining.
The Ministry of Industries and Mines is responsible for the development of the industiry in Iran and the main state affiliate for doing this is Iranian Mines and Mining Industries and Mines (BIM), which provides funds for the development of the sector. The Geological Survey of Iran (GSI) is responsible for surveying the country for the exploration and evaluation of mineral resources (excluding hydrocarbons).
Iran's economic policies are undertaken in the context of hte 4th Five Year Economic, Social and Cultural Development Plan (March 2005 - March 2010). The growth rate in the 4th Plan is 8%.
Manufacturing and Mining grew faster (11%) druing the 3rd plan than the economy as a whole (which grew at 8%). Between 1997 and 2005, manufacturing and mining exports grew from US$ 1.6 billion to US$4.6 billion, an annual growth rate of 16% and a better performance than expected in the 3rd Plan.
Mines in Iran produce a very wide range of output, including: Coal, Lead, Zinc, Copper, Phosphate, Industrial Clay, Salt, Dolomite and Manganese. The majority of mines are located in Khorasan, Kerman, Esfahan and West Azerbaijan.
Investors need to go through a procedure to establish themselves and to begin mining; this includes obtaining an Establishment Licence and an Investment Licence. If the SMC's problem is becoming established I could look into the procedure in more detail, if they explain where they are in the process.
Useful Links:
www.min.gov.ir and
www.iranmining.comPrivatisation has begun in banking. There are four private banks, although they have a small proportion of banking sector assets at present. In due course it is anticipated that foreign banks will be able to open branches in Iran. Growth of the Tehran stock exchange will improve the flexibility and extent of company ownership. Leading British-based legal firms have connections with Iranian firms. In December 2004, Iran’s credit rating was upgraded (by Fitch ratings) to BB minus, with the outlook on long-term rating as Stable; this improves Iran’s access to the international capital markets. Export Credit Agencies have a generally favourable view of Iran: Britain’s ECGD took the lead taking greater risk on companies in Iran’s energy sector. Limited recourse project finance is increasingly sought from foreign participants in the economy.
Steel, vehicles, household goods and textiles, cement, other construction materials, metal fabricating and food processing (notably sugar refining and vegetable oil production) are the main manufacturing sectors.
Vehicle production is a large element of manufacturing, about 20 percent, with sales of US$ 6 billion and is largely based around Tehran, Mashad and Tabriz, along with most of component manufactures. The government, through agencies of the Ministry Mines and Industry, has the largest shareholding in the vehicle sector, although foreign joint ventures have been of increasing importance. The vehicle sector could provide increasing exports to the immediate region.
Telecommunications attracts much attention in Iran and has much growth potential. Presently both mobile and terrestrial telephony are government monopolies. It is envisaged that mobile franchises will be sold to foreign companies but the first sale, to a Turkish company, is stalled at present.
A committee of BICC Members in the IT/telecoms industry is being formed to promote trade between the UK and Iran in this sector
It is intended that the restructuring of the power sector will rely on the private sector. The growth plans for the economy indicate the growth of electricity consumption at 7-8 per cent per annum over 10 years; installed capacity intended to be 47,500 MW by 2010. Local and foreign private sector construction, investment and financing is sought to build and operate a number of new plants.
Foreign investment and expertise are required for the water and waste water industries.
Agriculture accounts for 20 percent of GDP and its outputs are varied. Poultry and livestock farming is significant and some of it industrialised to European quality standards. Aquaculture and fishing are an underdeveloped export sector.