IN A statement to the Islamic Republic News Agency on January 9, Deputy Petroleum Minister and Managing Director of National Iranian Oil Refining and Distribution Company (NIORDC) Abbas Kazemi said that Iran is to invest in the construction of an oil refinery in Spain.
Their ability to do this comes about following the anticipated relaxation of sanctions against Iran thanks to its agreement to drastically reduce its atomic capability. Whilst it is looking for inbound investment as well sales of oil to the west, it also sees some major advantages to external investment and Spain has shown an early interest in partnering with the country.
This is a very sensible move by Iran as, by being a 50 per cent investor in the new refinery which is expected to be able to refine 200,000 barrels a day, it is guaranteeing sales of crude oil for use in Spain and its refinery.
Until such time as all of the sanctions are relaxed (and the recent arrest and almost immediate release of a US military vessel in Iranian waters shows how anxious the country is to improve the view that the west has of it) no final contract can be signed, but the matter has clearly reached the last stages of discussion.
Indeed it now transpires that the interim Spanish Minister for Foreign Affairs, José Manuel García-Margallo revealed on January 18 that the proposed refinery is planned to be built in Algeciras as a way of increasing employment in the Campo de Gibraltar.
This will join the existing refinery in Cadiz and whilst being attractive from an employment point of view, it is bound to see fierce opposition from environmental groups and possibly the government of Gibraltar.
With the current very low price of crude oil, the Iranian government will not see the volume of foreign currency earning that it had originally hoped for, so it is looking to add value to its exports, especially as new refineries are known to be efficient and therefore more profitable than older ones.
It is said that Iran is looking to invest in other external markets and the additional flow of Iranian oil will not help the economy of its traditional ‘sparring partner’ Saudi Arabia which is suffering economically already and all of this is happening just a few weeks before the next general election in Iran.