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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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