Snapback Mechanism Seen as Major Challenge for Oil Equipment Manufacturers

TEHRAN (Iran News) Speaking at a press conference in Tehran, Ehsan Saqafi highlighted the central role of domestically produced equipment in sustaining Iran’s oil industry.

“Back in the early 1980s, less than 10% of the equipment used in the oil sector was manufactured domestically. The rest was imported,” he said. “Over the past 12 years, domestic production has risen to 85%, with 70% of that meeting international standards and being deployed in various plants.”

Saqafi acknowledged that although sanctions have posed serious challenges, they have also spurred local production.

“Sanctions forced us to focus on domestic manufacturing. It was difficult, but it ultimately strengthened our capabilities,” he noted. “If Iran’s oil industry is still functioning and generating revenue today, it is because of these domestically produced components.”

The industry leader stressed that without local equipment, oil and gas operations would have stalled.

“Wherever Iranian manufacturers have been trusted, they have delivered results,” he added, expressing hope that an easing of sanctions would allow buyers the freedom to choose between domestic and foreign products.

Saqafi said that Iran currently has the capacity to meet 85% of its oil sector’s equipment needs domestically and aims to reach 95% within the next five years.

“The remaining share is not economically viable to produce here, but we have the ability to reach 100% if sanctions are intensified,” he stated.

On exports, Saqafi explained that sanctions and banking restrictions have complicated the trade of oil equipment.

“Some of our products are 95% made in Iran but are sold through third countries under their labels, and in some cases re-imported back into Iran,” he said. “We also export certain equipment directly to countries like Venezuela.”

Discussing the snapback mechanism’s implications, he warned:

“Its impact on economic activity cannot be denied. The snapback mechanism will certainly cause us difficulties—potentially even more severe than the pre-JCPOA period. It affects transportation, access to foreign currency, and the supply of raw materials.”

Despite these challenges, Saqafi expressed confidence in the resilience of domestic producers, emphasizing the importance of government support and unity in overcoming obstacles.

“Banking transactions continue as before to some extent, and digital currencies are opening new avenues. The private sector will find ways to operate, provided that no unnecessary barriers are placed in its path,” he said.

Saqafi also highlighted ongoing discussions between domestic manufacturers and the Oil Ministry regarding unresolved issues, noting that many of the same concerns have persisted for over a year. He pointed to energy imbalances as a systemic issue affecting households and industries alike, attributing it to “years of managerial imbalance.”

He concluded by announcing that the 7th Oil, Gas, and Petrochemical Equipment Exhibition and Conference, focusing on supporting domestic production, will be held in February.

“This annual event has established itself as an important platform for showcasing the private sector’s capabilities and strengthening local manufacturing,” Saqafi said.