August 09, 2019
After 11 auction sessions with no sales at all, the government’s Iran Energy Exchange (IRENEX) finally managed to auction off some fuel July 31, the first session at which it put gasoline up for sale.
The gasoline is destined for Afghanistan, an easy walk around sanctions.
IRENEX was set up last year to auction off crude and oil products in an effort to leverage Iran around the Trump sanctions on Iranian oil sales. It has proved to be a dismal failure, with hardly any interest in its auctions.
Of 38 million barrels put up for auction since last October, only 1,155,000 barrels or 3.0 percent have been sold. And 85 percent of that was sold in the first two sessions last year before buyers largely abandoned the exchange after sanctions took effect.
The July 31 auction was a comparative success with a total of 70,000 barrels of gasoline and other refined products sold—the first sale of anything at the auctions in the three months since April 30.
The sale brought in a total of $4 million, a pittance in the war against sanctions, however.
The table shows the record of all the auctions since they were started last October 28, seven days before the new US sanctions on Iran’s oil industry came into effect.
The rules allow the Oil Ministry to sell crude at 5 percent lower than Persian Gulf FOB prices—but that inducement has clearly not been enough to attract buyers to challenge sanctions.
Deputy Assadollah Qareh-khani, a member of the Majlis Energy Committee, said members were open to the idea that the government could offer crude at even more deeply discounted rates. He said members were prepared to sell at 15 percent below the Persian Gulf FOB rate.
The payment period was extended from 60 to 90 days a few months ago in an effort to attract more buyers.
Under this year’s budget, the Oil Ministry is obligated to put on auction each month 2 million barrels of light crude, 2 million of heavy crude and 2 million of natural gas condensates.
