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Bourse will again try to sell crude.

The head of the state oil company has overruled his deputy and announced that sales of crude oil on the Kish Island bourse will be resumed before Now Ruz.

Ahmad Qalebani, managing director of the National Iranian Oil Co. (NIOC), told the Shan news agency Sunday that while crude sales on the bourse had not been successful thus far, "the next phase" of offering crude on the bourse would be successful. He didn't say what changes would be made to make the auctions successful.

He said one shipload would be offered before Now Ruz and then successive shiploads would be offered regularly after Now Ruz.

Just two weeks ago, Qalebani's deputy for international affairs, Mohsen Qamsari, said bourse sales had been halted because they weren't right for Iran.

Qamsari said, "At present, we are using all common marketing techniques in the world oil markets except for the bourse, which is due to structural and legal constraints, because, when you trade on the bourse, you may be a winner or a loser, while the NIOC has no permission to enter such transactions."

Last summer, the NIOC put eight cargoes of crude on sale over 10 weeks, but found a buyer only for the fourth cargo offering.

The Kish Island bourse has been an effort by the Islamic Republic to make Iran a major player in the international financial markets. It was supposed to be the launch of a scheme to displace Western exchanges as the main venue for oil sales.

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The Kish bourse opened in February 2008 offering consignments of oil products. It started listing crude oil for sale July 13 of last year.

One problem with the Kish bourse is that the government sets the prices. In a normal commodity exchange, it is the traders who bargain and set prices. That, of course, is the whole point of a bourse. Interested buyers can bid any price at Kish, but if the price is lower than the state's offering price, the oil company doesn't have to sell--and, so far, has not.

The bourse is located on Kish because foreigners can fly to Kish without having to obtain an Iranian visa.

The Islamic Republic made clear in announcing plans for the bourse that it wishes to become a player in the commodities market. Commodities are traded on markets all over the world, although the dominant markets are in London and New York. Oil has historically been traded primarily in Rotterdam and New York--and, since 2000, it has been traded in an electronic market, IntercontinentalExchange (ICE), which is a virtual market operating around the clock over the Internet.
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Title Annotation:Economy: Money and its impact
Publication:Iran Times International (Washington, DC)
Date:Jan 27, 2012
Words:437
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