Plummeting oil prices are "hurting" Iran's economy, according to a Tehran-based oil and energy journalist. But Reza Zandi says the country will cope because of how it's learned to manage under pressure. The Shahid Tondgooyan Petrochemical Company plant, 15 kilometres south of Tehran, produces oil by-products. It was inaugurated in 1968, with a second phase coming into operation five years later. In all, around 250-thousand barrels of crude oil are processed every day. Iran holds the world's fourth-largest proved crude oil reserves and the world's second-largest natural gas reserves, according to US Energy Information Administration. But oil prices have plunged by more than 40 percent since June to around 65 US dollars a barrel, placing a severe strain on the country's economy - which is already hobbled by international sanctions imposed over its nuclear programme. Nasser Babaei is the Managing Director of the Shahid Tondgouyan Petrochemical Company plant. "Regarding the impact of the declining course of crude oil price, we should see whether the decrease in the price of oil by-products is proportional to the crude price or not. If the crude price goes down with the same level as the international price of petroleum products, it will have no effect on the profit of refineries," he says. "Nevertheless, if the world prices of by-products decrease faster than the crude price, it will definitely affect the company's profitability or even cause losses. Thus far, the price agreement between oil by-products and crude has had no remarkable impact on our company's performance." He continues: "If any other country had gone through these massive sanctions like Iran, the consequences on its oil companies would have been devastating. "We have also been affected but fortunately, due to our domestic capabilities and potentials inside the country and in our company, and given our 50 years of experience as a well-known refining company in the world, we have managed to overcome many sanction-related glitches. We have done that by resorting to creativities and innovations of our own technicians and people and companies from outside." On Sunday, Saudi Arabia's oil chief dismissed allegations that his kingdom conspired to bring down oil prices in order to harm other countries and told a summit of Arab energy leaders that he was confident the market would stabilise. It came after Iranian President Hassan Rouhani said the sharp fall in global prices was the result of "treachery," a remark interpreted as a reference to Saudi Arabia. Reza Zandi, a Tehran-based oil and energy journalist for Mardom-e Emrouz Daily, says the drop has affected Iran's economy in different ways. "First, in our current fiscal year's budget (ending on 20 March 2015) the oil target price was defined as 100 dollars per barrel but the present oil price is about 40 dollars less than that target in the second half of this year. When the country's budget is shaken, the whole economy of Iran will be hurt," he says.1 "But this fall is not limited to the crude price and export of our non-oil products will be harmed too. A majority of our non-oil exports are comprised of petrochemical, condensates and petroleum products and plummeting oil prices have also led to a decline in the export of our non-oil products, hurting our economy even more." But Zandi believes that, in the long term, Iran will not be the worst affected in terms of exports. "Iran will be the least harmed exporter of crude oil because over the past three years it has learned how to manage itself under pressure and run its economy. It has kind of adjusted itself to the situation," he explains. You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/37b6dc71ff455c55da76b39f74a8bb95 Find out more about AP Archive: http://www.aparchive.com/HowWeWork

• published: 03 Aug 2015
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