June 20-2014
The International Court of Arbitration in Paris has fined Iran’s Naftiran Intertrade Company (NICO) $5.5 million for unilaterally stopping all its oil swaps across the Caspian Sea, Iran’s deputy oil minister announced Monday.
NICO is a subsidiary of the state-owned National Iranian Oil Co. (NIOC).
Under oil swap contracts, Iran was receiving crude oil from across the Caspian that was then used in northern Iran refineries. Iran then sold an equal volume of Iranian crude in the Persian Gulf on the accounts of the firms across the Caspian. The Caspian producers got to export more oil and Iran saved the expense of piping oil long distances to northern Iran.
Under the Ahmadi-nejad Administration, all the swap deals were halted unilaterally. No explanation was given, although there were news reports that Iran insisted on charging a higher fee for the swaps.
Deputy Oil Minister for International Affairs Ali Majedi told the Tasnim news agency the companies filed complaints against Iran in the International Court of Arbitration. The court is a private body. Many business contracts specify that disputes be taken to it for resolution.
One of NICO’s swap deals was with Caspian Oil Development of Ireland, which had asked the court for $97 million in compensation, Azerbaijan’s Trend news agency said.
It also quoted an informed source as saying Vitol Company of Switzerland and some other partners had dropped their complaints against NICO.
Iran had signed contracts with Select Energy Trading, Dragon Oil of the UAE, Vitol of Switzerland, and Caspian Oil Development of Ireland to swap crude oil they pumped from wells in Kazakhstan and Turkmenistan.
The Rohani Administration said some months ago that it wished to resume the swap deals. But there have been no announcements of any resumptions.