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Iran Says Wants to Create Market for Caspian Crude

LONDON, May 31 (Reuters) - Iran intends to become a major consumer of Caspian Sea crude oil to bolster economic and political ties with its northern neighbours, a senior Iranian oil official said on Wednesday.

"Iran could guarantee at least a 500,000 barrels per day (bpd) market inside the country for crude oil from Kazakhstan, Azerbaijan and Turkmenistan," said Hossein Kazempour Ardebili, senior adviser to Oil Minister Bijan Zanganeh.

To secure the barrels, Iran is poised to enter into long-term swap or purchase deals with Kazakhstan and Azerbaijan, politics permitting, Kazempour said at an oil seminar.

In Kazakhstan, Tehran is willing to engage in 20-year guaranteed pacts for crude oil swaps or purchases.

As for Azerbaijan, Iran would buy or swap 220,000 bpd of Azeri crude oil from state oil compoany SOCAR or from the partners in the Azerbaijan International Operating Company (AIOC) on a long-term basis.

To gear itself up for the crude influx, Iran intends to adjust and expand its existing refining and pipeline network in the northern part of the country.

As a first step, Iran aims to increase the capacity of an existing pipeline which runs from the Caspian port of Neka to Tehran to 50,000 bpd within six months. That line could be further expanded to 115,000 bpd within 18 months, he said.

Construction of a new $220 million Neka crude oil pipeline with capacity of 370,000 bpd could be completed by 2002. Iran is also gearing up to hoist capacity at its northern refineries at Tabriz, Tehran and Arak to about 800,000 bpd.


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