Iran lets 'private' Iranian firms trade oil

STATE-RUN: Iran's oil minister sits next to the logo of the National Iranian Oil Company. (Getty Images)

Iran, the world's fourth-largest oil producer, is permitting local private firms and not just foreign companies to enter the trade in Iranian crude, officials said on Sunday.

Deputy Oil Minister Akbar Torkan referred to two Iranian entities now permitted to carry out the business and said it was part of a drive to boost the private sector. But he told Reuters the state would still control crude production.

The state's National Iranian Oil Company (NIOC) is in charge of Iran's output, which had been running at just over 4 million barrels per day until OPEC agreed supply cuts in October.

"Up to now, all the companies that have a licence to trade with NIOC were foreign companies. Now the Iranian companies are permitted to do business with them," Torkan said.

NIOC's managing director, Seifollah Jashnsaz, said one organisation that could now trade was a body that helps the underprivileged and war disabled, a so-called "bonyad" or charitable trust with business interests.

The Bonyad-e Mostazafan va Janbazan is the one of the most prominent of Iran's bonyads, which have large business interests across the country and in a range of fields.

"The Bonyad-e Mostazafan has not as yet become active in the field of crude oil sales but it is setting up an organization to do that," Jashnsaz was quoted by IRNA news agency as saying, adding the bonyad signed a deal in June to work in the oil trade.

Torkan said NIOC's policy was to sell oil to end-users, so any firm seeking permission had to have deals with downstream refiners and users.

"The policy as a whole is to get permission for the private sector to do business in the trade of oil. It is the policy of privatisation," Torkan said, citing Mostazafan and a firm he identified as Iranian Investment Company.

Iran has been seeking to expand the role of the private sector in an economy that is now dominated by the state. Bonyads, which analysts say are closely linked to the political establishment, also have big business interests.

Allowing a bonyad to trade in oil "is not privatisation", said Saeed Laylaz, a newspaper commentator and regular critic of the government. "It is sharing the rent" from oil with loyalists of the establishment, he added.

Critics say bonyads, set up after the 1979 Islamic revolution, are sprawling and inefficient.

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