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Mon 18 Feb 2008 02:06 AM

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Iran opens first oil exchange

Move will aid transparency, create competition and motives for investment, oil minister says.

Iran on Sunday inaugurated its first stock exchange for oil products and petrochemicals, in a bid to become a major player in the global downstream industry.

Opec’s number two crude oil producer hopes that its oil exchange can lead the way for a domestic downstream industry to match its upstream crude oil production, the country's main foreign currency revenue winner.

"We have been a good seller (of crude oil) and now we have a higher objective to have a share in the oil trade," Oil Minister Gholam Hossein Nozari told reporters.

Iran claims to rank second in the region after Saudi Arabia in terms of production of petrochemicals at 22 million tons a year.

But it has failed to gain a significant share in the world export market because of state control of its petrochemical industry and state subsidies.

"The objective is to make transactions (of oil products) transparent, create competition and motives for investment," the oil minister added.

"And so that we can reach out to international markets as a big oil producer as well as an oil trader," he added.

Iran plans to open a market for trading crude oil as part of the second phase of the nascent exchange at an unspecified future date.

"The first phase should operate for a while and we should find out its strong and weak points in order to open the second phase. Because the second phase is more complicated," Nozari said.

The idea of establishing a market for oil and its by-products was first mooted a decade ago, and practical steps to prepare its creation were first taken in 2001.

But its opening has lagged over administrative procedures and long-delayed moves to liberalise the price of petrochemicals which have been under the government's control.

The opening ceremony was held in Tehran via a video conference to the southern island of Kish where the new exchange is based.

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