Prospects of the National Iranian Oil Company's Inability to Pay Half of Its Debts

The Research Center of the Parliament has published a recent report regarding the oil budget bill for the upcoming year, stating that the National Iranian Oil Company had debts amounting to $48.66 billion by the end of the last Persian year, of which $15.7 billion must be settled in 1398. However, the company's 'reliable sources' for all expenses, including new investments and debt payments, amount to only $7.5 billion. Thus, according to the assessment of the Research Center, not only is the possibility of new investments in question, but the company's reliable sources will only cover less than half of the due debts for the next year. Additionally, in the budget bill, a significant portion of the company's resources comes from 'reserves and savings', including oil exports, and this 'reliable source' is also in doubt. The report indicates that in the budget bill for the upcoming year, 1431 trillion rials (equivalent to $24.49 billion) has been forecasted for the National Iranian Oil Company. '386 trillion rials are considered 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. Considering the upcoming limitations, the possibility of signing oil contracts with foreign oil companies becomes very weak, and ultimately more than 347 trillion rials of resources are from other receipts, which is unlikely to be realized.' The report adds that the only reliable sources for the National Iranian Oil Company are 441 trillion rials (equivalent to $7.5 billion) from reserves and savings. 'In fact, it can be said that the only reliable sources of the company without foreign and domestic loans are this amount of 441 trillion rials.' In the expenditure section of the National Iranian Oil Company, 512 trillion rials are allocated for investment (about $8.76 billion) and 920 trillion rials (about $15.7 billion) for repaying domestic and foreign debts. In the national budget bill for 1398, the amount of crude oil exports is considered to be 1.54 million barrels per day at a price of $54.10 per barrel. The internal sale of gas condensates is also estimated at 135,000 barrels per day, accounting for a 5% discount compared to the export price. Based on this assumption, the total value of crude oil exports and internal gas condensate sales is estimated to be just over $32 billion, with the National Iranian Oil Company's share being 14.5% ($4.8 billion). The value of natural gas exports is also $3.45 billion, with 14.5% belonging to the National Gas Company. Thus, the total revenues of the National Iranian Oil Company (and gas) from the sale of oil, gas condensates, and gas will amount to $6.79 billion. Meanwhile, Iran's current crude oil exports are about one million barrels, and the U.S. has announced that it will not extend the exemption for foreign buyers of Iranian oil next May. The Research Center of the Parliament has suggested that one way out of the current situation is 'to transfer part of the company's shares as debt.'