National Iranian Oil Company Denies Reports of 'Bankruptcy'

Recently, the Research Center of the Parliament reported that the National Iranian Oil Company (NIOC) had debts amounting to $49 billion by the end of the last Persian year. The Research Center suggested that one way to overcome the current situation would be to 'transfer part of the company's shares as debt.' Pedram Soltani, a former member of the Chamber of Commerce, recently tweeted that 'the debt of the National Iranian Oil Company has surpassed $50 billion. This company is spending its depreciation reserves and savings, meaning it is selling the carpet from under its feet. The flawed economy and mismanagement of oil are bankrupting Iran's oil industry. The cash cow of Iran's economy is sick.' In response to Mr. Pedram's statements, NIOC issued a statement saying that the assets of the National Iranian Oil Company are 'at least several times the amount mentioned' as its debt, and thus the issue of bankruptcy does not apply to NIOC. This statement did not clarify the exact amount of NIOC's assets, but in March 2016, the Iranian Ministry of Oil estimated the total assets of the 'oil and gas industry' of the country, including refineries and pipelines, at $400 billion. It is unclear how much of these assets belong to NIOC. The Shana news agency quoted the deputy for economic feasibility studies of NIOC's integrated planning management as saying, 'All agencies and companies, both public and private, allocate their depreciation reserves and part of their profits as a source for repaying debts and obligations and for investment.' The report adds that over the years, the approved budget of this company by the government and the Islamic Consultative Assembly has included amounts under the title of asset sales to provide part of the necessary financial resources for investment. The Research Center of the Parliament states that NIOC had a debt of $48.66 billion by the end of the last Persian year, of which $15.7 billion must be settled in 2019, but the company's 'reliable sources' for all expenses, including new investments and debt repayments, are only $7.5 billion. The report states that in the budget bill for the next year, 1431 trillion rials, equivalent to $24.49 billion, is anticipated for NIOC. '386 trillion rials of the resources are expected from domestic loans, which, given the company's inability to repay previous debts, is unlikely to be realized. More than 257 trillion rials of the anticipated resources are from foreign loans, which depend on signing oil contracts with foreign investors. Given the upcoming restrictions, the possibility of signing oil contracts with foreign oil companies is very weak, and ultimately more than 347 trillion rials of resources are from other receipts, which is unlikely to be realized.' On the other hand, in the budget bill, a large portion of the company's resources comes from 'reserves and savings,' including oil exports, and this 'reliable source' is also in question. Iran has forecasted the export of 1.54 million barrels of oil and gas condensates for the next Persian year, while the current export of oil and gas condensates from Iran is just over one million barrels, and the U.S. has announced that it is not willing to extend oil waivers for Iran's customers. The oil waivers will expire in May.