Iran's oil swap in the Caspian Sea has resumed following a roughly seven-year suspension, National Iranian Oil Company reported.

Under the swap deals, Iran accepts oil from other Caspian littoral states to use at its Tabriz and Tehran refineries in the north of the country. In return, it delivers the same amount and quality of crude to its southern oil terminals in the Persian Gulf region for delivery to international customers of Caspian oil suppliers.

Several oil tankers have been offloaded at Neka port on Iran's shore of the Caspian Sea. The swap consignments will gradually increase in volume, the report said. However, it did not specify the origin of the crude.

Iran's primary swap partners in the past were Kazakhstan, Turkmenistan and Azerbaijan.

Iran's semi-official Tasnim news agency reported that the UAE's Dragon Oil -- a wholly owned international upstream subsidiary of Dubai state-owned Emirates National Oil Co. which produces oil only from a concession in Turkmenistan's sector of the Caspian Sea -- has recently shipped 6,000 mt of Turkmen oil to Neka aboard a Russian-flagged oil tanker. 

Iran has been expanding the port's infrastructure with the aim of surpassing the volume of Caspian oil trade previously handled. It is currently targeting swap contracts of a few hundred thousand barrels each. 

Iran's previous Caspian oil swaps were suspended by former oil minister Masoud Mirkazemi, who held the post from 2009-2011. Mirkazemi held that Iran was losing a few dollars on each barrel of Iranian crude swapped for Caspian oil. Iran also complained that the poor quality of the oil received under the swaps was damaging its northern refineries.

During the past four years, following a change of government and the appointment of Bijan Zanganeh as oil minister, Iran has been negotiating with Kazakhstan, Russia and Turkmenistan to restart the oil swaps.

(Source: Platts)