Iranian Oil Equipment Firms Voice Concern Over Policies, Export Restraints

EghtesadOnline: Manufacturers of oil and gas equipment and machinery have the potential to generate $5 billion in export revenue a year, head of the Iranian Oil Equipment Manufacturers' Association said.

News ID: ۷۴۹۲۰۰

16 December 2019

"Domestic companies have indigenized almost 85% of petroleum and gas processing and production equipment. Despite the progress they still cannot have their fair share in international markets," Sirous Talari was quoted as saying by ISNA.

The remaining machinery and tools (15%) cannot be made domestically either due to tech shortcomings or lack of basic materials, he said, adding that there is no country that can be 100% self-reliant and setting up production lines for some parts and equipment is not cost-effective and must be imported, Financial Tribune reported.

“Self-reliance does not mean that a country must produce all its needs at home.”

Locally-produced equipment are compliant with international standards, but still domestic firms cannot play their role in international markets because global standard organizations (mostly American) are not willing to provide Iranian producers licenses (due to acrimony over Iran’s nuclear energy program), Talari said.

This potential notwithstanding, domestic manufactures are also saddled with self-imposed sanctions as (seemingly) the government is not willing to work with the private sector, he complained.

The association has 750 members most of which are operating at less than half their capacity.

Talari voiced concern over the shutdown of businesses and other problems like raw materials being held up in the customs for no acceptable reasons.

"It is indeed regrettable that those in charge of industrial policy are not producers themselves.”

The bloated bureaucracy and cumbersome rules are undermining the present and future markets for domestically-made oil equipment and parts despite the good quality, he complained.

Private companies can handle the new US sanctions as was the case in the past, but unstable trade policies, complex banking regulations and other problems have made it difficult to evade the unilateral and hostile restrictions imposed by the Trump administration, the news agency quoted him as saying.

Washington announced in May it was imposing new economic restrictions on Tehran after pulling out of the agreement, under which Tehran had agreed to curb its nuclear activities in return for sanctions relief. The deal was signed between Tehran and six major powers, namely the US, Russia, China, Britain, France and Germany.

Echoing the protests of most stakeholders in the private sector, he said, "We meet regularly with the Ministry of Industries, Mining and Trade. Problems cannot be addressed with hollow slogans."

He questioned the need of such gatherings with senior industry officials from “which nothing of essence is achieved.”

Talari said so long as middlemen and brokers are present when it comes to oil and related tenders, private enterprise will not be able to assert itself, play its destined role and contribute to economic growth.