“Our condition for Mr. Rouhani’s talks with heads of state of the 5+1 group, and not just between Mr. Rouhani and Mr. Trump, was lifting sanctions,” he told reporters.

However, Zarif said, Trump was willing to first hold talks with Rouhani and then possibly lifting sanctions.

“Rather he (Trump) was willing that the meeting take place and then said there was a possibility that the sanctions would be removed after this meeting.”

“We have always announced that if the United States wants to hold talks with the Islamic Republic, it should return to its commitments and stop sanctions,” he said.

Iran has been insisting that the only path to negotiations between Tehran and Washington is that the United States must lift all the sanctions that it has illegally and unilaterally imposed on Iran.

In an interview with Fox News aired on Tuesday, Rouhani said if the U.S. administration is really seeking dialogue with Iran “it must create the needed conditions and of course lifting sanctions.”

In May 2018, President Donald Trump abandoned the nuclear deal and returned the previous sanctions and imposed new harsh ones.

Zarif says he held talks with a number of Congressmen

Zarif also said that he held phone conversations with a number of Congress members while he was in New York to attend the 74th UN General Assembly.

“We have made no request from members of the Congress. We also do not interfere in the United States’ internal affairs. The talks we have held so far were upon the request of the other side. These talks were held to present real image of Iran and not to make a request,” he said.

‘Operation of INSTEX depends on Europeans’

Zarif also said it depends on the Europeans that INSTEX becomes operational.

“Destiny of INSTEX depends on the Europeans to reach a conclusion that they cannot wait for the United States’ permission for everything,” he said.

INSTEX is a special-purpose vehicle established in January 2019 by France, Germany and the United Kingdom to facilitate non-dollar trade with Iran in a bid to bypass the U.S. sanctions.

So far, INSTEX has not become operational despite intense efforts on all sides.

Majid Takht Ravanchi, Iran’s permanent representative to the United Nations, has likened INSTEX to a “beautiful car without gasoline”.

“The current situation of INSTEX does not suffice. This mechanism without money is like a beautiful car without gasoline,” he told reporters on June 29.

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He further mentioned the government’s policies for encouraging domestic production, saying that “Fortunately, replacing imports with domestic production and consequently eliminating unnecessary commodities from the market has led to a balance in the currency market.”

He also underlined the significance of the CBI’s new policies in organizing the forex market and noted that the central bank’s decisions in moving towards stabilization of this market and formation of the integrated forex market has been an important positive sign for the country’s economy.

Pour-Ebrahimi went on mentioning Iran’s decision in taking new steps in reducing the country’s obligations to the Joint Comprehensive Plan of Action (JCPOA) and said a new atmosphere has emerged in the country in the face of sanctions, in particular, the Supreme National Security Council decision in reducing the country’s adherence to JCPOA in order to address economic demands, has made it clear for Europeans that they need to take action.

“I believe Iran now has the upper hand in the economic negotiations with the Europe and the chances of positive economic circumstances in the future are getting higher,” he said.
“Lack of compliance to the U.S. sanctions by countries such as Russia, China and Turkey, has led to a breakthrough from the sanctions and a sign of their failure,” he added.

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Sadegh-Abadi, a deputy oil minister, said Iran’s gasoline production had already exceeded 110,000 liters per day, adding that some 2.2 million barrels of fuel are also supplied to refineries across the country each day.

“This is a great achievement at the time of the economic war,” said the official, making a reference to Iran’s struggle to cope with the impacts of U.S. sanctions on the oil and gas industry.

Iran has seen its official oil exports decline as a result of sanctions although officials insist they would continue to sell oil through unconventional channels.

Iran increases its oil and condensate refining capacity by nearly 40 percent in two years.

The country’s oil and gas production has increased since the sanctions began in November as the government seeks to respond to a growing domestic demand for energy.

The refining industry has largely benefitted from the sanctions as the capacity for turning crude into other products has increased by nearly 40 percent in the past two years.

Sadeq-Abadi said last month that the total operating capacity of Iran’s refineries had increased from 1,550,000 to 2,150,000 barrels per day in the two-year period ending in May 2019.

The NIORDC chief said plans were in place to further expand the refining sector and bring the total capacity of the refineries across the country to 2,400,000 bpd at the end of the current Iranian calendar year in March.

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In this regard, as the official inauguration of this new program, a business contract will be signed within the next few days, under which a domestic company is going to receive crude oil in exchange for funding a project to renovate a power plant in Rey county, near the capital Tehran.

At the first glance, the idea of offering oil in exchange for execution of industrial projects seems quite a new idea, however unfortunately it is no more than the same old structure under a new façade.

U.S. sanctions and Iran’s coping tactics

Since the U.S.’s withdrew from Iran’s nuclear pact in May 2018, vowing to drive Iran’s oil exports down to zero, the Islamic Republic has been taking various measures to counter U.S. actions and to keep its oil exports levels as high as possible.

The country has repeatedly announced that it is mobilizing all its resources to sell its oil, and it has done so to some extent. However, considering the U.S.’s harsher stand in the new round of sanctions, the situation seems more complicated for the Iranian government which is finding it harder to get its oil into the market like the previous rounds of sanctions.

Selling in the gray market, offering oil in stock exchange, offering oil futures for certain countries, bartering oil for basic goods and finally bartering oil in exchange for executing industrial projects are some of the approaches Iran has taken to maintain its oil exports.

A simple comparison between the above mentioned strategies would reveal that they are mostly the same in nature, and there are just small differences in their presentation and implementation.

For instance, let’s take a look at the “offering oil in stock market” strategy, and to see how it is different from the new idea of “offering oil in exchange for development projects”.

Oil at IRENEX vs. oil for execution 

As I mentioned earlier, one of the main strategies that Iran followed in order to help its oil exports afloat has been trying new ways to diversify the mechanisms of oil sales, one of which was offering oil at the country’s energy stock market (known as IRENEX).

In simple words, the idea behind this strategy was that companies would buy the oil which is offered at IRENEX and then they would export it to destination markets using whatever means necessary.

Since the first offering of crude oil at Iran Energy Exchange (IRENEX) in October 2018, the plan has not been very successful in attracting traders, and during its total 15 rounds of oil (including heavy and light crude) offerings only 1.1 million barrels were sold, while seven offerings of gas condensate have also been concluded with no sales. This has made some energy experts to believe that this whole strategy is doomed to fail.

The most important challenge that Iran has been faced in executing this approach is the impact of U.S. sanctions on the country’s banking system and its shipping lines, since the purchased oil, ultimately has to be transported from the agreed oil terminals via oil tankers to different destination across the world.

With the previous strategies coming short, nearly six months after the first offering of oil at IRENEX, in early May, Masoud Karbasian, the head of National Iranian Oil Company (NIOC) announced that the company plans to barter oil for goods and in exchange for executing development projects.

However, the “oil for execution” part wasn’t implemented until this weekend when Head of Thermal Power Plants Holding Company (TPPH) of Iran, Mohsen Tarztalab announced that the company is going to sign a €500 million contract under the new “oil for execution” framework for renovation of Rey power plant near Tehran.

According to Tarztalab, the TPPH decided to go for the deal after the sanctions prevented Japan from financing the renovation of Rey power plan.

Based on this deal, TPPH is going to renovate the power plant and in return NIOC will pay for the services in the form of crude oil. Clearly, TPPH is then in charge of the received oil and it’s their concern weather to export it or sell it inside the country.

A closer look at this deal, reveals how similar it is to other approaches that NIOC has been taking. Just like the oil offered at IRENEX, in this model, too, a company is left with an oil cargo which is banned from entering global markets. The buyers are once again facing financial barriers and shipping difficulties.

Although, like the first oil offering in which a few companies risked buying some oil, this time, too, TPPH, is making a significant gamble in signing this deal, but, just like the IRENEX experience, it seems really improbable for more companies to follow the state-owned TPPH’s footsteps.

Final thoughts

The need for taking all necessary measures for withstanding the economic pressures of the U.S. sanctions is an obvious fact, however the ways of doing so should be chosen more carefully.

It seems that the government has been only wrestling with the “problem” here rather than attempting to find practical “solutions”.

Fortunately, in the past few months, the government seems to have seen the fact that the best way to withstand any economic pressure is the transition from an oil-dependent economy to an active, self-sufficient and independent economy which is more invested in its potentials for trade with neighbors rather than the oil market.

Solutions like offering oil in the energy exchange or oil for execution might be some kind of transition from traditional oil sales to new approaches, but they are not ultimate solutions in the face of sanctions.

To overcome the current economic conditions, the government has realized that it should have medium- and long-term planning and policy making.

Active diplomacy and attention to the energy needs and capacities of the neighboring countries and offering discounts for oil products, although are more time-consuming ways to increase oil sales, but will be more successful than the ways we discussed, and will yield greater benefits for the country.

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The minister did not provide any figures for the country’s oil exports in the face of U.S. sanctions. “Giving a figure is not in our interests,” he added.

In late May, Reuters reported that Iranian crude oil exports fell in May to 500,000 barrels per day (bpd) or lower.

The United States reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and six world powers, aiming to cut Iran’s sales to zero.

The United States also told buyers of Iranian oil to stop purchases by May 1 or face sanctions, ending six months of waivers that had allowed Iran’s biggest customers to import limited volumes.

However, in the same month, Iranian oil ministry announced that the country is mobilizing all its resources to sell its oil in a gray market, countering unjust and illegitimate U.S. sanctions.

Deputy Director of Iran’s Ports and Maritime Organization (PMO) Hadi Haqshenas said in late May that crude oil loadings and exports from the country’s ports has not been halted and the exports are ongoing just like before.

“Perhaps the destinations of oil cargoes from our ports have changed but the legal exports are ongoing,” Haqshenas said.
The official noted that the oil ministry has adopted new tactics and new destinations in shipping its oil exports following the re-imposition of U.S. sanctions, giving no details of the new tactics or destinations.

“Of course, it cannot be denied that the loading of oil and products has fallen compared to the past, but the shipping of oil cargoes from our ports has definitely not stopped,” he added.
Iranian oil industry has been under pressure from the U.S. efforts to isolate the country by reimposing sanctions.

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“Even though the central bank is going through a difficult period, I’m very hopeful about overcoming the problems with the mentioned plans in progress,” he noted.

“Communicating with people and economic activists, transparency in policy making and implementation, and responding to people are key components of a good governance in modern central banks,” he said, adding “In the complicated conditions facing the country’s economy, I have been trying to implement these guidelines to pass through the current situation.”

The official went on saying that in the past three months, the government has allocated $5 billion for supplying basic goods and also $6 billion for importing basic materials for the country’s production units through the domestic Forex Management Integrated System (locally known as NIMA).

In early May, Hemmati had outlined CBI plans for neutralizing or relieving the impact of U.S. sanctions on the country’s economy.

In an Instagram post, the official pointed out some of the approaches that CBI was going to follow in order to counter the U.S. sanctions and to control inflation.

Maintaining and strengthening the relative stability of the foreign exchange market by strengthening and improvement of the performance of NIMA, setting foreign currency exchange policies to support non-oil and oil exports and providing liquidity and working capital to maintain and boost domestic production and finally establishing a financial mechanism with neighboring countries were some of the plans which CBI head said is going to execute.

Explaining CBI plans for managing inflation, the official noted that previous monetary policies regarding the controls over cash flow would be modified using the new structure of monetary policy and consequently uncertainty over controlling the cash demand was going to decrease.

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The official expressed hope that with the Japanese Prime minister Shinzo Abe’s visit to Iran the two countries could remove some of the hurdles in the way of bilateral trade.

“Japan has been one of Iran’s oldest trade partners and we have had great economic relations throughout history,” he said.

Shafeie mentioned the negative impact of the U.S. sanctions on the two countries’ bilateral trade, saying “although the U.S. sanctions have affected our relations but the Japanese are highly interested in maintaining ties with Iran and we hope that Abe’s Iran visit will remove part of these restrictions and we will return to the good old relations.”

He further noted that most of Iran’s non-oil exports to Japan include nuts, carpets, fruit juice concentrates, and the imports are mostly machinery and electronic equipment.

Japan’s Prime Minister Shinzo Abe is scheduled to travel to Iran on Wednesday, according to Japanese media.

According to Japan Times, he is expected to stress the importance of the international nuclear deal reached in 2015 between Iran and the P5+1, even as the United States has withdrawn from it and Tehran said last month it would suspend some of its commitments under the accord.

The Japanese prime minister last met Iranian President Hassan Rouhani on the sidelines of United Nations General Assembly meeting in 2013.

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The official noted that it is expected for the exports from the country’s mining sector to, at least, reach the last year’s $8.5 billion by the end of the current Iranian calendar year (March 2020).

“We won’t also have any problems regarding the supply for the domestic consumption in the current year,” he added.

Asked about foreign investment in the industry, the official noted that currently near $1 billion of investment is required for equipping new mines and overhauling some equipment in old ones and over $400 million is also required in exploration and research sectors.

“We hope that both foreign and domestic investors take the chance to enter this lucrative industry,” he added.

Mentioning some of the ministry’s incentive programs for encouraging exports, Sarqeini stated, ”In close cooperation with the customs administration, the industry ministry has significantly moderated the base-prices for metals and minerals in order to ensure the exporters.”

 Mining industry productive and lively

The official further noted that the ministry also plans to revive over 500 of the country’s small mines which have been dormant due to financial or technical issues.

“Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) has been selected as the operator of this program and the organization is following the plans closely,” he said.

Elsewhere in his remarks, Sarqeini mentioned the positive and upward trend of the mining industry’s production, saying, “The mining sector has witnessed a constant rise in production levels in the past few years and we intend to keep this trend in the years to come.”

The official put the mining industry’s production level at 460 million tons for the past Iranian calendar year (ended on March 20) and expressed hope that the output for the industry will reach 500 million tons by the end of the current year.

“Based on our studies and new explorations’ data, it is expected that the country’s iron ore and copper resources would double in the upcoming years,” the official said.

Mining sector to inject $2 billion to NIMA

Asked about the re-injection of exports revenues into the country’s financial cycle, Sarqeini noted that in the past Iranian calendar year, the mining sector injected $1.5 billion of foreign currencies into the country’s Forex Management Integrated System (locally known as NIMA).

“This year we expect the mining sector to, at least, bring back $2 billion to NIMA,” he added.

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The official noted that the oil ministry has adopted new tactics and new destinations in shipping its oil exports following the re-imposition of U.S. sanctions, giving no details of the new tactics or destinations.

“Of course, it cannot be denied that the loading of oil and products has fallen compared to the past, but the shipping of oil cargoes from out ports has definitely not stopped,” he added.

Iranian oil industry has been under pressure from the U.S. efforts to isolate the country by reimposing sanctions. The new round of sanctions targeting Iran’s oil sector were put in action on November 4, 2018.

In late April, U.S. President Donald Trump’s administration announced that Washington has decided not to extend waivers allowing major importers to continue buying oil from Iran. The waivers ended on May 2.

Earlier this month, Iranian Deputy Oil Minister Amir-Hossein Zamaninia said Iran is mobilizing all its resources to sell its oil in a gray market, countering unjust and illegitimate U.S. sanctions.
“This is not smuggling. This is countering sanctions which we do not see as just or legitimate”, Zamaninia said in a conference held at the Islamic Azad University of Tehran.

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