Oil Ministry official says buy-back oil contracts
key to economic growth
BBC Worldwide Monitopring
Tehran, 23rd June (IRNA) : Buy-back oil contracts due to their characteristics
including transfer of technical know-how, creation of new job opportunities
and broad involvement of contractors and domestic producers will pave the
way for economic blossoming, said an Oil Ministry official Wednesday [23rd
June].
The director-general of the public relations department of the Oil Ministry
and adviser to minister, Mohammad Sohofi, was commenting on the recent
remarks of the members of the board of directors of the consulting engineers
society who believe buy-back contracts harm oil prices.
Sohofi said that increasing the capacity in oil and gas production does
not mean unchecked production and damaging the market which results in
decline in oil prices.
Moreover, he said, the Oil Ministry seriously abides by its production
quota set by the Organization of Petroleum Exporting Countries (OPEC).
Turning to the remarks of the board that oil demand remains constant,
he said it is better to delegate prediction of the future of international
oil market to energy and economy elites as well as experts in international
oil issues.
Members of the board of directors of the consulting engineers society
said they believe the country is struggling with an inflationary stagnation.
They cited the buy-back procedure in foreign transactions as a main
factor behind the situation which will, at best, lead to more oil supply
and, at worst, to lower rates.
The board also noted that this, in addition to harming the market, causes
oil prices to further decline.
They noted that oil supply is increasing under circumstances in which
demand remains constant and given the commitments made by these countries
under the buy-back system, oil prices may not exceed the current limits
as in previous years.
The board also suggested that alternative methods to the buy-back procedure,
such as the finance system, should be considered so that oil rates would
be fixed on the basis of real supply and demand equations.
The Majlis has authorized the Oil Ministry to attract foreign investment
(worth several billion dollars) through buy-back contracts for oil, gas
and petrochemical schemes.
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