Zarif says Iran confident OPEC will allow it to win back market share

Moscow (Platts)--16Jan2014/744 am EST/1244 GMT

Iranian foreign minister Mohammad Javad Zarif said Thursday he was confident OPEC member countries would allow Iran to win back its market share on global oil markets once Iranian oil exports return to normal levels.

Zarif, speaking to state-run Russia 24 TV network in a live interview, said it had been determined within OPEC what Iran might be able to produce.

"I'm convinced that we'll be able to agree within OPEC that those who previously used Iran's share will stop, so that Iran can use its right to produce crude within the volumes [agreed for the country]."

Iran's crude exports have plummeted since international sanctions were imposed against Tehran in the summer of 2012.

Exports have fallen to an average of around 1 million b/d from pre-sanctions levels of 2.2-2.3 million b/d, but Tehran hopes exports will rise over the next six months following a landmark agreement reached in Geneva on November 24 that will give Iran some sanctions relief in return for concessions on its nuclear program.

The agreement maintains the core oil and financial sanctions but gives Iran access to some of its oil revenues frozen overseas.

It will also see the EU lift the ban on the provision of EU-linked shipping insurance for any shipments of Iranian oil, regardless of destination.

In addition to the EU sanctions, Iran has been targeted by US financial sanctions that have forced its main customers in Asia to reduce imports of Iranian crude in order to maintain access to the US financial system for their banks.

As a result, Iran has lost market share to other exporters, including Iraq, which has overtaken the Islamic Republic in a number of countries. In Turkey, for example, Iraq has overtaken Iran as top supplier.

Oil minister Bijan Zanganeh late last year also made clear that OPEC would have to make room for its eventual full return to world oil markets.

OIL-FOR-GOODS DEAL

Zarif, meanwhile, was also asked about a recent report that Iran and Russia were considering a deal to exchange Iranian oil for Russian goods and equipment.

Asked whether Moscow and Tehran could sign an agreement on the issue, Zarif said: "As for my visit, we're discussing other issues. The issue, which you were talking about, is not an issue to be discussed within the current visit."

"Russia and Iran are neighbors with vast relationships, including [in the economy sphere]. The aim of my visit is the discussion of other issues," he said, adding that these included Syria, Afghanistan and the Caspian Sea.

According to a report by news agency Reuters on January 10, Russia and Iran are negotiating an oil-for-goods swap agreement that would see Iran send 500,000 b/d of oil to Russia in exchange for unspecified goods and equipment.

Iran's oil ministry said the day after the report was published that no agreement has been made between Tehran and Moscow.

"So far, no agreement has been made between the two countries," Akbar Nematollahi, director general of the oil ministry's public relations bureau, was quoted as saying by the ministry's news agency Shana.

However, an unnamed source in Russia's government told Russian daily Kommersant that Moscow and Tehran had been discussing such a deal.

But the source said the two were discussing a deal to include payments in cash rather than "simple barter."

NUCLEAR PROGRAM

Speaking earlier in the day, Zarif also pledged that Iran was "ready to implement the practical steps in line with agreements reached in Geneva."

"We believe there is a possibility for reaching final agreements [on the issue], despite a low level of trust between the parties," he said during a joint briefing with Russian foreign minister Sergei Lavrov in Moscow.

"As our nuclear program is of peaceful nature, the settlement over the situation is absolutely possible," he said.

--Stuart Elliott, stuart.elliott@platts.com
--Nadia Rodova, nadia.rodova@platts.com
--Edited by Jonathan Fox, jonathan.fox@platts.com

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