TEHRAN (PIN) – Head of Oil Pension Fund Tuesday announced that oil and economy ministers were holding talks on the setup of Oil Bourse and the center would become operational in the near future.

Mehdi Karbassian talking to PIN quoted Oil Minister Gholamhossein Nozari as saying that his talks with Minister of Economic Affairs and Finance Davud Danesh-Ja’fari on the running of the Oil Bourse would be finalized soon.
In Oct. 2006, President Mahmud Ahmadinejad underlined the necessity to set up the Oil Bourse, recalled the official, regretting over the delay.
Karbassian blamed the row between petroleum and economy ministries over the selection of secretary general for the delay in the establishment of Oil Bourse.
He also pointed to the pricing method in Oil Bourse as another reason for the postponement.
When the secretary general was picked, the executive operations of Oil Bourse setup would start, assured the Pension Fund chief.
Karbassian said staff of oil industry would be among the main shareholders of Oil Bourse.
Experts, namely Ali Emami-Meibodi and Safiyeh Sheikh-Babaii, have expressed their views on the issue.
At present, heavy bureaucracy governs the Iranian oil market in which hundreds of directors and ordinary employees are involved. Since in the Oil Bourse, the main factors affecting the market are supply and demand, this will bring more transparency to the oil market.
The Oil Bourse can also pave the way for comprehensive supervision over the whole industry. When various oil and petrochemical companies supply their products through the Oil Bourse, all transactions will be open to supervision by mass media and people.
Oil Bourse can be a major step toward privatization of the industry, because it will get various companies engaged in oil trade.
Therefore, Oil Bourse can put an end to government’s monopoly over oil transactions and limit the exclusive rights of state-run bodies in this regard. In that case, Iranian investors can enter the oil market for the first time.
As Oil Bourse enters into international trade processes, due to intense competition which is governing production and supply of oil, gas and petrochemicals, Iranian companies will have to improve their production and management systems and slash surplus costs to be able to survive competition against other companies. This development will also enable other economic sectors of the company to get ready for entry into global trade.
Establishment of Oil Bourse will reveal weaknesses of banking, insurance, customs, financial, and administrative sectors and make them eliminate those weaknesses. It will also make oil industry pay more attention to transportation and storage systems and enhancement of national capacities in energy sector.
Iranian Oil Bourse can offer its economy with a lot of opportunities and can be taken as a ground for development of infrastructures of the most important economic sector of the company; that is, oil industry.
The proposal for establishing Iranian Oil Bourse was first offered during the Third Economic Development Plan (1999-2004) and related studies began as of 2004.
In June 2004, Mohammad-Javad Assemipur, official in charge of the plan, visited London Oil Bourse and negotiated with some traders. Subsequently a report on Iran’s Oil Bourse was submitted to the then minister of economic affairs and finance in 500 pages.
The plan to establish Iranian oil, gas, and petrochemicals bourse was ratified on July 11, 2005 by Bourse Council in line with Article 15 of the Third Economic Development Plan Act and article 95 of the Fourth Economic Development Plan Act. The Bourse Council issued legal permits for the establishment of Oil Bourse and required the Ministry of Petroleum to take necessary steps in this regard.
When the Bourse Council gave the go-ahead for the inauguration of Oil Bourse, the plan entered a new operational phase. Therefore, oil, gas, and petrochemicals bourse was known as the third Iranian commodity exchange after agricultural and metal products exchange markets.
The main hall of the Oil Bourse will be established on Kish Island and plans are underway to open a hall in Tehran. In case of inauguration, most transactions will be carried out through the Internet and the exchange market will not only deal in crude oil, but also petrochemical products as well as oil and gas products.
Part of transactions of the Iranian Oil Bourse will be carried out on paper and another part will be conducted physically. It is predicted that petrochemical and oil products will be traded in the first phase of the bourse. The Oil Bourse is expected to take charge of all transactions related to the oil sector including oil swap transactions with Central Asian countries after three years of its inauguration.
The main goal of the Iranian Oil Bourse is to make the country a major center for oil trade in the Middle East region.