Energy Exchange Performance Defensible

Ali Hosseini said the value of trade on IRENEX touched 2.13 trillion rials ($188 million) on March 12, a record since inception five years ago. 

He said the energy exchange grew both in qualitative and quantitative terms in the outgoing year. Regarding the former he pointed to 60 new commodities offered on the market and issuing various government bonds. 

As for quality, the market saw developments that for long were of concern to market players, he said, apparently alluding to the crude oil offers on the capital market for the first time, according to Financial Tribune.

“For over 16 years authorities had been obliging the National Iranian Oil Company to offer crude oil on the capital market. This long-held desire was realized this year,” he was quoted as saying by the Securities and Exchange News Agency (SENA).

Rating the success of the initiative, he said the infrastructure was in place for a smooth offering and commended the “efficient role” of the Securities and Exchange Organization as regulator, the central Securities Depository of Iran as the clearing and settlement body, Tehran Securities Exchange Technology Management Company as the body in charge of software support, and IRENEX as executor.  “All said, IRENEX was quite successful on the supply side.” 

Demand Side Down

However, on the demand side IRENEX was facing obstacles that deterred potential buyers. “Limitations in part were related to restrictions in money transfer and banking services and partly to transportation. All this got together to scuttle the role and potential of the private sector,” he said. 

Despite the hurdles to the oil market, IRENEX provided the tools for active private sector companies to compete in a fair, transparent and inclusive market.  

The IRENEX chief said the capital market has accomplished its goals and cooperated closely with suppliers and policymakers, adding that the market saw its cooperation with NIOC and the Oil Ministry reach its apex.  

Pointing to the complexities in the oil market, he said it would be rather hasty to rate the success of the oil offer initiative because “it takes time for players to adapt with market conditions and for commodities to find their place in the market.”

Buyers should be given “more time to enter this big market…It can be said with a fair degree of certainty that the market will be more successful in the long term,” he said. 

He pointed to the Natural gas condensate offer for the first time on IRENEX, saying barely 500 barrels of the commodity were sold in the first few weeks. Now the volume of NGC trade has reached 120,000 barrels a week.  

Regarding the regular and successful offers by NGC on the IRENEX, the CEO said the commodity faces the same obstacles as crude oil when it comes to shipping via the sea. “We are working on mechanisms to facilitate NGC export via land,” he said, expressing the hope that the same mechanism for crude oil would become operational. 

Gasoline Offer  

Asked about selling gasoline in the capital market, Hosseini didn’t reject the possibility, pointing to the recent rise in gasoline production and self-reliance in the strategic area. 

“After launching the third phase of the Persian Gulf Star Refinery, Iran reached self-sufficiency in gasoline production. Excess output will be exported.” 

Gasoline self-sufficiency was announced by Oil Minister Bijan Namdar Zanganeh during the inauguration of the third phase of the Persian Gulf Star Refinery in the southern port city of Bandar Abbas in February. The refinery produces 45 million liters of gasoline per day, almost half of the country’s total daily consumption. 

Future Prospects  

The IRENEX chief forecast better prospects for IRENEX in the coming fiscal. He hoped that in the next fiscal more sellers would do away with traditional selling methods and turn to IRENEX to offer their products. 

Referring the merits of trade in the capital market, he pointed to the 10% tax exemption for sellers who offer their products on IRENEX.

He outlined IRENEX plans in the next fiscal saying that as a first step IRENEX wants to expand the market for existing commodities.  In the next phase it aims to finance the construction of power plants. 

IRENEX has undertaken research on the physical offering of gas and gas-related bonds and seeks to connect the capital market to the water market, he said.