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Iran sees more oil sales in 2021-2022 budget

  • Author
  • Aresu Eqbali
  • Editor
  • Daniel Lalor
  • Commodity
  • Natural Gas Oil

Tehran — Iran's government has counted on selling 2.3 million b/d of combined crude oil and gas condensates in the country's next year, which starts March 20, 2021, state media reported.

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Next year's budget bill, submitted to the parliament Dec. 2, forecasts pocketing 1,990 trillion rials from sales of oil and condensates despite US sanctions chocking its crude trade channels.

That is around four times higher than Iran's budget for its current year had relied on.

"We have mobilized all our possibilities and we find conditions suitable for increasing oil sales in the next [Iranian] year," President Hassan Rouhani said in a cabinet meeting, quoted by the official news agency IRNA.

Rouhani's government has not ruled out a fresh dynamic with the US in the light of the upcoming new administration headed by President-elect Joe Biden.

"Of course, we have forecast an increase in oil sales to over 2 million barrels of oil and condensates [per day]. But this does not mean that we have increased the budget's reliance on oil," Rouhani said.

There are criticisms against a big oil money role in the budget, particularly at a time that the OPEC member is under US "maximum pressure" including against pumping its oil into the international markets.

"We believe that this 2.3 million barrels of oil and condensates can be sold in international or domestic markets. We can sell these... our reliance on oil is as much as...the current year's," Rouhani said.

"But oil income increase will be mainly spent in two areas... development of roads, railroads, transit, power plant, oil and gas infrastructure... or empowerment of the deprived people."

The anticipated oil revenue is based on a price of $40/b, Mojgan Khanlou, spokeswoman of the Budget Committee, was quoted as saying by state television.

"Exports of oil will be with $40 per barrel. The parity rate for the dollar is 115,000 rials and the previous rate has been eliminated for the year 1400 budget," she said.

Thus, value of the foreseen oil and condensates sales would surpass $17.3 billion.

The crude oil sales alone were considered 650,000 b/d, local media quoted Hamid Pourmohammadi, deputy head of Planning and Budget Organization, around mid November. The organization did not respond to a S&P Global Platts query for relevant details.

The oil ministry has been permitted to sell up to $3 billion worth of Islamic bonds in both rial and foreign currency, IRNA reported. Any unsold bond could be used as payment to contractors or to settle the energy projects debts.

The government has also seen to sell in-advance 700,000,000,000,000 rials ($6 billion) worth of oil and gas condensates in both national and foreign currency. If the foreseen income from conventional sales was not to be fulfilled, the presell will increase to match the oil revenue forecast ($17.3 billion).

As a regular fashion, 20% of oil, gas condensates and natural gas exports revenue will be saved in the National Development Fund.

The bill should be debated in the parliament and later ratified by the legislative watchdog Guardian Council before becoming law.

"The Year 1400 budget has a 20% growth compared to the year 1399. The general budget is 47% higher compared to the previous year," Khanlou said.