>>> Menas Strategic Focus 0 6 / 13 Politically independent monthly news and analysis of strategic developments in Iran

Presidential election surprise as Rohani wins

· Volume 09 · Number 06 on the first round Hassan Rohani 013 2 Moderate cleric Hassan Rohani surprised all forces by throwing their support behind Rohani. inclination has been shaped over the last few strategies, swinging the government back

June Iran analysts by winning the 14 June presiden- years in response to the idea that many domes- to a moderate/reformist agenda for the next tial election on the first round. He managed to Second, the timely withdrawal of reformist tic tensions have been caused by Mahmoud four to eight years. Those who argue that the secure 51 per cent of the vote, beating his four candidate from the race Ahmadinejad’s non-clerical status. president has no power and that all policies are conservative rivals. Mohammad Baquer Qali- similarly shifted the support of a considerable determined by the Supreme Leader fail to regis- baf, the mayor of , came a distant second proportion of more liberal voters (especially Whatever the reasons for Rohani’s success, the ter the vast differences between the reformist with 16.5 per cent. Green Movement supporters), who were results also indicate that Iranian society under- government of Khatami (1997–2005) and the attracted to a Rohani–Aref coalition. stands the connection between international Ahmadinejad years (2005–13). Rohani’s victory can be considered a landslide. relations and economic conditions. In contrast The candidate captured the support of both Third, Rohani received public support from former to 2005, when the majority of voters were Realistic change will need a realistic timeframe; reformists and moderate conservatives, and presidents Rafsanjani and Mohammed Khatami attracted to Ahmadinejad’s populist economic winning the election was only a small first step. the key factors contributing to his success and leading reformist figures, including some agenda, this year most have voted for change As president, Rohani will have to deal with bear examination. First, when the candidacy Green Movement leaders who are still in prison. on all levels, especially in international affairs. a conservative-leaning Majles (which has to of former president Hashemi Rafsanjani was approve his cabinet ministers) as well as with rejected by the , a silent seg- Fourth, a number of conservative-leaning vot- Realism and optimism various power centres that oppose his views. ment of Iranian society was mobilised. They felt ers preferred to return a cleric from the first Rohani’s proposed policies will re-orient exter- compelled to push back against anti-Rafsanjani generation of Islamic Republic politicians. This nal relations as well as domestic and economic His unexpected landslide will nonetheless >>>

Commentary 1 Month in review 3 Special feature 4 Oil & gas 6 Economy & business 8 Iran diary 9

> Presidential election surprise > International affairs: Leaders > Challenges ahead for Rohani > Oil sector news > Economy in brief > re-elected speaker congratulate Rohani > Gas sector news > Automotive sector > Iranian rep attends IAEA Vienna > Domestic issues: First space > Upstream project update > Banking and finance meeting monitoring centre > Trade news > Turkish police arrest Iranian > Nuclear news: Bushehr under > Iranian pilgrims killed in Iraq repair > Iran closes Iraq border terminal > Key risks > Rohani gets 51 per cent of vote 2 www.menas.co.uk Iran Strategic Focus · June 2013 Commentary www.menas.co.uk [email protected] +44 Kingdom United 5HJ WC1B London Row31 Southampton Ltd Associates Menas © 2013 reserved rights All 1751-4614 ISSN Iran Strategic Focus >>> Production Editor: Production Charles Gurdon Director: Managing staff Associates Menas by Produced only subscription by Sold taken asaresult of usingthepublication. appearing inthispublication orfrom any actionordecision loss), however itarises,resulting from the useof any material loss of profits, loss of businessorany indirect or consequential damage orloss(including,withoutlimitation, financialloss, by lawMenasAssociates Ltd shallhave noliabilityfor any responsible for inaccuracies. To thefullextent permissible Menas Associates Ltd cannot ensure against orbeheld Disclaimer publisher. any other means,withouttheexpress writtenconsent of the recording, taping,orbyinformation storage orretrieval, orby graphic, electronic ormechanical,includingphotocopying, resold inwholeorany part,orusedinany form orany means publication may bereproduced, repackaged, redistributed, the nameof MenasAssociates Ltd andassuchnopartof this All information contained inthispublication iscopyrighted in Copyright ( 0 ) 20 3585 1401 3585 20

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Associates Associates 1 + Pictures Month in review with diverse interest groups. ity to engageinmultidimensionalbargaining politics over thenext few years willbehisabil- a crucialsuccessfactor intransforming Iranian previous positionsinsidetheregime. Indeed, presidents andhisown credentials earnedfrom support network organised behindtwo former Furthermore, Rohani canrely onanextensive government. niqué pledgingto cooperate withtheRohani Council the powerful IslamicRevolutionary Guard can useto effect genuinechange.For example, generate amomentum that thenew president will tryto increase transparency inthe nuclear He hasalready stated that hisgovernment process, paving theway for sanctionsrelief. debates, Rohani caninjectnew ideasinto the tiations have beenexposed duringtelevised Now that someof thenuancesof nuclearnego- stream factionswithin hisgovernment. that hewillincludeindividualsfrom allmain- ment leaders.Rohani hasalready announced release of politicalprisonersandGreen Move- order to easedomestic tensionsandleadto the as agovernment of national reconciliation in The Rohani government could present itself The pendulum policy

>>> ( IRGC) hasalready issuedacommu-

3 Menas Visit ourever changingwebsite. Now withbuilt-intranslation powered byGoogle Special feature Associates: www.menas.co.uk 4 Oil & gas national relations. reintroducing amore logicalapproach to inter- immediate neighbours,especiallySaudi Arabia, Finally, Rohani willfocus onimproving tieswith the government. tions andreinstate alevel of professionalism in soned technocrats anddiplomats to key posi- Most significantly, Rohani will return many sea- to develop new cultural andeconomic policies. dominated politicsfor thelast eight years and him to pushbackthepower blocsthat have olutionary hard lineany more. Thiscould enable the Iranian population doesnot supporttherev- win more than12percent of thevote means Rohani canargue that SaeedJalili’sinabilityto confidence. programme andwilllookat ways to restore matters thistimearound, we canexpect major Though thenuclearnegotiations complicate Iran–US relations experienced new momentum. tive, andafew months into thenew presidency dialogue withIran to something more construc- victory, theEuropean Unionmoved from critical the potential for change.Following Khatami’s Khatami victory in1997,itispossibleto gauge By comparing Rohani’s successto thelandslide change for potential The 6 Economy & business the nuclearfile. radar, especiallyifpositive signalsemerge over Now isthetimeto putIran backonthebusiness international companies willalsobegin. but oncetheprocess starts, therepositioning of Undoing thesanctionsregime willtake time, the businesshorizon withinthenext two years. companies, theIranian market could reappear on With respect to theinterests of international reforming Iran. Khatami era to develop arealistic approach to will beableto draw from theexperiences of the cesses, buttheemerging Rohani government of thegamebutwillcontinue to disrupt pro- those wholost won’t abidebydemocratic rules As partandparcel of theIranian politicalscene, economic activityandcapitalinvestment. and thepositive momentum shouldboost a degree of normalityover thenext few years, There isrenewed hopethat Iran willreturn to nuclear issue. optimistic’ aboutthepossibilityof resolving the Obama hasstated that heis‘cautiously the electionresult, andeven President Barack Most European leadershave already welcomed slower pacethanmost observers expect. shifts inIran’s foreign relations –albeitat a 8 Iran diary 9 3 www.menas.co.uk Iran Strategic Focus · June 2013 Commentary On 30May, the UnitedStates liftedtrade onSanctions lifted laptops, mobiles tary strike against Iranian nuclearfacilities. support to Israel intheevent of anIsraeli mili- to Iran’s nuclearprogramme andpledgingfull approved aresolution affirming firmopposition The USSenate on22May unanimously Israel Iran Backing against to similarrestrictions. other Iranian industries, suchasengineering, The actallows theUSpresident to subject tries aswell asitsforeign currency reserves. that targets theIran’s auto andminingindus- On thesameday thecommittee passed anact with Iran. any businessundertakingsubstantial dealings a billthat would authorisesanctionsagainst on 22May approved andsent to the fullHouse The USHouseCommittee onForeign Affairs New anti-Iran act Iran–US Syria, Bahrain, Qatar, andSaudiArabia. Russia, Turkey, Italy, theUnitedArab Emirates, the UnitedStates, UnitedKingdom,France, stakeholders reacted positively, amongthem declared Iran’s new president, international After moderate clericHassanRohani was Rohani congratulate World leaders International affairs MONTH INREVIEW

1 Month in review programmes. computers andsoftware suchasantivirus such asmobiletelephonesandlaptop consumers. Themove affects UShardware equipment andsoftware to non-government sanctions against salesof communications and Taiwan. Singapore, SouthAfrica, SriLanka, Turkey, months: India,China,Malaysia, SouthKorea, their oilimportsfrom Iran over thepast six nine countries from sanctionsfor decreasing On 6June,however, Washington exempted doing businesswithalready-blacklisted Iran. Air the Treasury saidwork to get around banson Everex, aswell asofficials of thethree, which companies The 20includeIran-based transport andfreight sanctions. programme andhelpingthecountry to bypass allegedly contributing to Tehran’s nuclear and individualsonitssanctionsblacklist for The USTreasury alsoput20companies companies. gooyan, Bou Ali, blacklisted on31May: the BandarImam, owned orcontrolled bythegovernment, were Eight Iranian petrochemical companies either New sanctions on companies, individuals attacks against UScompanies. reports that thecountry wasinvolved incyber Iran’s missionintheUnited Nations rejected attacks Iran denies cyber Mobin, Shazand, andTabriz Petrochemical 3 Aban Air, Nouri, Special feature DFS Worldwide , and Persian, Shahid Tond-

4 Oil & gas sanctions. systems underthepretext of UN-imposed its contract. Russiarefused to deliver S-300 draw itslawsuitagainst Russiaifithonours Mahmoud-Reza Sajjadi,saidTehran willwith- On 6June,Iran’s ambassadorto Russia,Seyed Iran–Russia in theKingdom. cell, membersof whichwere recently arrested Arabia’s allegations that Iran haslinksto aspy Minister Foreign Ministry spokesperson Deputy Foreign Arabia Iran–Saudi ing trade-related penalties. than any other majorWestern nation inimpos- total trade banonIranian goods,going further Canada saidon29May that itwould enforce a Iran–Canada passing inorbit overhead. tro-optic, andradio systems to track objects Space Monitoring Centre willuseradar, elec- of Markazi on9June.TheImamJafar Sadeq inaugurated inthecentral Iranian province Iran’s first spacemonitoring centre was First space monitoring centre Domestic issues raini airspace. Iranian unmannedaerialvehicle (UAV) inBah- by Bahraini officials that they hadspotted an The Iranian Foreign Ministry dismissedaclaim Iran–Bahrain Abbas Araqchi dismissedSaudi 6 Economy & business tial election. a missionto causeturmoilduringthe presiden- Minister Brigadier-General AhmadVahidi. May following a ceremony attended by Defence Ninth Herz,went into massproduction on20 Iran’s latest home-madeairdefence battery, Iran power displays military the arrested anumber of peopleallegedlylinked to Iranian mediareported that securityforces had MKOAlleged arrested agents reported. tude of 6.1hitnearFarouj. Nocausalitieswere scale hitShiravan andanother with amagni- quack withamagnitudeof 5.1ontheRichter and Farouj ineastern Khorasan on21May. A Two earthquakes shookthecitiesof Shiravan eastern Khorasan Earthquake shakes transregional militaryunits. batting maritimeterrorism andmonitoring waters. Thebattleship wastasked withcom- completing itsfirst missionininternational Iran’s first mission cruiserLarak completes Kermanshah province. scientists at RaziUniversity inthewestern The new drugshave beenproduced byIranian asthma, andpost-anaesthesia convulsions. to treat bloodpressure (hypertension), chronic Kamran Daneshjouunveiled three new drugs Minister of Science,Research, andTechnology newThree medicines Mujahedin KhalqOrganisation ( Larak battleship returned homeafter 8 Iran diary

MKO ) on ) on >>> 9 4 www.menas.co.uk Iran Strategic Focus · June 2013 Commentary programme. trying to accelerate itsuranium enrichment ( The report IAEA . was installed inthepresence of President water reactor inthecentral Iran cityof Arak On 9June,themaincontainer of aheavy- container installed reactor Arak repair dueto atechnicalmalfunction. the nuclearpower plant inBushehrisunder Sajjadi announcedthat themaingenerator of Iranian ambassadorto RussiaMahmoud-Reza Bushehr under repair Nuclear news meeting on16June. discussed thenew administration duringa on leadingissuesandproblems. They also Majles Speaker AliLarijani to exchange views guidelines from theleader. Rohani alsomet with Rohani stating that hehadobtained two leaderspresented awarmrelationship, a day after theofficial announcement. The the president-elect heldameeting on16June, Supreme Leader Ayatollah AliKhameneiand votes cast on14June. million votes, about51percent of thevalid announced that HassanRohani hadwon 18 Interior Minister Mostafa Mohammad-Najjar spot top wins Rohani IAEA) saidinareport on22May that Iran is International Atomic Energy Agency 1 Month in review

Currency devaluation Economic deterioration escalation. Military attack Sanctions Domestic factionalism decrease Key risks 3 Special feature – – – – – of risk Increase/ C

4 as thenew official rate. of IRR24,500to theUSdollarwillbeconsolidated IRR12,260 won’t besustainable andanexchange the rial.Nevertheless, theofficial rate of generated bytheelectionwilleasepressure on It isexpected that thepositive momentum the mediumterm. the new government canimplement remedies in inflation andunemployment will continue until induced new optimism abouttheeconomy, high Although theelectionof HassanRohani has in thenearfuture unlessthere isanaccidental There isalmost no likelihood of amilitaryattack nuclear negotiations. period to tryto injectsomemomentum into the Washington andBrusselswillgive Rohani agrace Washington, analysts are hopeful that Despite thesanctionsinpipelinefrom domestic tensions. to cooperate withhim,indicating aneasingof cabinet. Sofar, allkey stakeholders have pledged by includingmembersof diverse factionsinhis Rohani willwork towards national reconciliation It isvery likely that President-elect Hassan ommen Oil & gas t

6 Economy & business lack of capitalformation andjobs. investors are very wary.The consequence is a business environment inwhichprivate-sector ernmental organisations have contributed to a corruption, andfavouritism withinsemi-gov- Lack of investor confidence. Mismanagement, major socio-economic challenge. ployment ashigh27percent, Iran isfacinga standing at about 13percent andyouth unem - Unemployment. Withoverall unemployment chasing power. that iseating away at the average citizen’s pur- rial have generated aninflationary economy nomic mismanagement, andthecollapse of the High inflation. Subsidyreforms, general eco- lenges are describedbelow. be very long,butthemost significant chal- issues. Acomplete list of economic woes would has beenaneconomic engine,isfacingmajor ment. Inparticularthepetroleum sector, which poor performance of theAhmadinejadgovern- The Iranian economy hasbeenbattered bythe Rohani government willdevelop to address them? the key challengesandlikely remedies that the delivering onhiseconomic promises. What are confidence from theMajles,hewillhave to start appointing hiscabinet andobtaining avote of presidential office inearly August 2013. After President-elect ahead for Rohani Challenges SPECIAL FEATURE 8 Hassan Rohani willtake over the Iran diary

>>> 9 5 www.menas.co.uk Iran Strategic Focus · June 2013 issues have been causedmainlybypoor Rohani hasstated clearlythat Iran’s economic N subcontractors. has weakened themore professional domestic sional behaviour inproject management and trusted circle hasledto disastrously unprofes- ernment’s policyof awarding projects to itsown Lack of professionalism. TheAhmadinejadgov - omy more widely. such aspetroleum, butalsoaffects theecon- drain. Thisissignificant inspecialisedindustries past few years have ledto agrowing brain Brain drain. Theundesirable conditions of the regain lost financialandtechnical strength. more competitive again,it willtake timefor itto devaluation of therialhas madeIranian industry pressure ondomestic industry. Though therecent policies andsubsidyreforms have putalot of Collapse of domestic industry . Misplacedtrade and negative consequences for localindustry. the reforms have hadamajorinflationary impact more efficient for theeconomy asawhole.Sofar to findways to make on-goingsubsidy reforms Subsidy reforms. Thenext government willhave capital andtechnologyintheoilgassector. sanctions, Iran hasbeendeprived of needed and gassector. Asadirect result of external Lack of investment andtechnologyintheoil revenues have hadasevere impact. undermined byexternal sanctions.Decliningoil especially theoilandgasindustry, hasbeen Sanctions. Theeconomy asawhole,and Commentary ew policies 1 Month in review During hiscampaign andalsoininterviews after subsequent economic hardship. ing power for the average Iranian familyand The consequences have beenalossof purchas- economic deterioration, inflation, andfrustration. tions andinternational tensionshave resulted in ment institutions. Healsobelieves that sanc - management andlackof confidence ingovern- Ministry of Petroleum Ministry of Industry, Mines,andTrade Central Bankof Iran Management andPlanningOrganization Or Table 1:Candidates for Rohani’s economic team

ganisation Candid 3 Special feature 4 Oil & gas Mohammadreza Nematzadeh Bijan Zanganeh Akbar Torkan Mohammad Nahavandian Yahya Ale-Eshaq Eshagh Jahangiri Majid Qasemi Mohammad-Hossein Adeli Mohammad-Ali Najafi > > fairly. Hisother economic pledges are: by creating national wealth anddistributing it He alsowants to achieve higherlivingstandards actions that willcontribute to economic stability. his victory, Rohani hasindicated that hefavours Bank of Iran isation that Ahmadinejad dissolved in2005 reviving theManagement andPlanningOrgan- giving more independenceto theCentral ate 6 Economy & business Career administrations > > administration > > > > presidency > > > > > Former ministers inKhatami’s andRafsanjani’s Chairof Iran Chamberof Commerce, Industry, Former minister of commerce inRafsanjani’s Former minister of industry andminesin Former Central Bankof Iran governor Former Central Bankof Iran governor Oneof thefounders of thepro-Rafsanjani Current chairof Tehran Chamberof Commerce, Current managingdirector of Pasargad Bank Former ambassadorto theUK Former headof Management andPlanning and Mines Industry, andMines Khatami’s administration Organization inthefirst term of Khatami’s Executives of Construction Party ernment’s economic management priorities. Nobakht, hasprovided insight into thenext gov- Rohani’s top economic adviser, MohamadBaqer > > > environment. housing, cashsubsidies,andhealthcare issues suchasinflation, unemployment, improving the businessandregulatory empowering domestic production offering short-andlong-termsolutionsto

8 Iran diary >>> 9 6 www.menas.co.uk Iran Strategic Focus · June 2013 governmental sector, investment guarantees, role intheeconomy, empowerment of thenon- law foresees areduction of thegovernment’s ignored bytheAhmadinejadgovernment. The mate , whichwaspassedbytheMajlesbutthen Continuous Improvement of theBusinessCli- It willimmediately implement theLawfor the production, tourism, andother sectors. just inmanufacturingbutalsoagricultural It willsupportlocalindustry byinvesting not investments.’ rich isnot subsidiesbutprotection for their In thewords of Nobakht, ‘Thereal needof the increase payments to lower income families. to higherincome familiesinorder to beableto ernment intends to discontinue cashpayments ated through subsidyreforms. TheRohani gov- It willredefine thedistribution of cashgener- transparency’ inorder to secure sanctionsrelief. sanctions, followed bywhat hecalls‘increased goal willbeto make sure that there are nonew plexities of thenegotiation process. Hisfirst 2003 to 2005andheisfamiliarwiththecom- relief. Rohani wasIran’s nuclearnegotiator from It willlookfor initiatives to secure sanctions

Commentary >>>

Focus Caspian www.menas.co.uk 1

Month in review

confidence. and similarmeasures to restore investor paign andare alsolikely to begiven top posts. leum) played significant roles in the Rohani cam- of transportation anddeputyminister of petro- petroleum) andAkbarTorkan (former minister minister of industries anddeputyminister of such asMohammadreza Nematzadeh (former the upcoming administration. Key technocrats tants andwillcertainlyhave aneconomic role in Nobakht isoneof Rohani’s most trusted consul- business. ter understanding of theissuesfaced byprivate government, where willhave developed abet- but alsotheirmore recent experience outsideof is not onlytheir previous government experience The advantage offered bytheseformer ministers country’s economic management. to theadministration, hewillreinvigorate the ministers from theRafsanjani andKhatami eras Rohani managesto return someof theseasoned appointments to key positions (seeTable 1).If of theIranian economy willrest onpolitical More thanonany policies,however, thefuture A new team Will R ohani manage to returnsomeseasoned ministers ? 3 Special feature 4 Oil & gas OIL &GAS come on lineover thecurrent Iranian calendar Yadavaran, andNorthAzadegan fields–will early oilproduction projects –including Yaran, NIOC chief AhmadQalebani saidthat several projects production Early China’s oil imports from Iran from China’s imports oil Oil sector news develop SirriAandE. the the Iranian market byobtaining rights from began in1995whenTotal triedto re-enter The justice department claimedthat thebribes the rights to develop several fields. edly paidbetween 1995and2004to obtain million inbribesthat Total intermediaries alleg- 29 May. Thecharges stemmed from some$60 and gasconcessions, USauthoritiesannounced it allegedlybribedIranian officials to secure oil million underUSforeign corruption lawsafter French oilfirmTotal SA hasbeenfined$398.2 fines US Total from Iran by46,33,and28percent, respectively. Japan, andSouthKorea, reduced theirimports Three other majorAsianbuyers, namely India, Energy Agencyestimates. year (started 21March 2013)theInternational age 1.38millionb/dinthecurrent Iranian fiscal according to Reuters. Iran’s oilexports willaver- up 11percent over thesameperiodin2012, oil from Iran inthefirst four months of 2013, China importedabout400,000b/dof crude National Iranian OilCompany ( 6 Economy & business ) to to NIOC) and segments of phases17and18. rise thisyear after launchingphases12,15,16 Gas production from SouthPars isalsoslated to surpassed 50percent completion. oil projects, especiallyinshared fields,have year to March 2014.Three-quarters of on-going year. Therefore, studies for earlyproduction provision of the requisite fundsinthecurrent tised development of Sardar-e Jangalfieldand technology, theMinistry of Petroleum haspriori- Despite bottlenecks inproviding equipment and to complete, hesaidon24May. The development planneedsupto $10billion Sea, according to managingdirector AliOsuli. Sardar-e JangaloilandgasfieldintheCaspian contracts withdomestic contractors to develop Iran’s JangalSardar-e deals awarded Pakistan pipelineproject. ment that itwasconsidering joiningtheIran– of energy. Thevisitfollowed India’sannounce- discuss ways to enhancetiesinvarious types in Indiaon26May for athree-day visitto Minister of Petroleum Rostam Qasemiarrived talks energy for India in Qasemi among theplansfor thecompany upto 2020. oil andgasfields,pursuingHSEprojects are recovery, completing development plansat shared Raising gasproduction to 10bcf, enhancing waters willincrease by40percent by2020. production from oilfieldslocated in Persian Gulf director Iranian Offshore OilCompany ( IOOC raising oil production Khazar OilCompany hassignedeight Mahmoud Zirakchianzadeh saidthat 8 Iran diary ) managing IOOC) managing > >>> 9 7 www.menas.co.uk Iran Strategic Focus · June 2013 of pentane, 4,000b/d of butane,1,400 b/d Sirri NGLhasthe capacityto produce 1,500b/d feedstock for theLavan oilrefinery. output from theplant. Thecargo willbeusedas been loadedoutto Tabuk oiltanker asthefirst densates produced at theSirriNGLplant have announced that about50,000barrels of con- The NG Sirri First Gas sector news oil, orgascondensates. to refine 5,000–10,000b/d of crudeoil,furnace small oilrefineries. Eachwillhave thecapacity 40 millionto acquire thetechnologyto build and Construction Company , Iran haspaid$30– director of theNational Iranian OilEngineering According to Farhad Ahmadi,themanaging small refineries Technology to build per cent since2012. imports have nonetheless fallenbynearly45 ous month, according to Reuters. SouthKorean from Iran inApril,up7.5percent from theprevi- South Korea bought 139,400b/dof crudeoil South Korean crude imports investments, theofficial noted. structure, advanced technologies,andhuge years becausetheproject needsrobust infra- Development of thefieldis forecast to take 10 with have just beenstarted byacompany affiliated Commentary National Iranian OilCompany ( SADRA. L cargo

1 Month in review ) has NIOC) has > >>> been installed. the satellite platforms of thephaseshasalso drilling package asof March. Thelast jacket of is proceeding withoperations for the second Company, asubsidiaryof Dana Energy Group, within acouple of months. DanaKishDrilling 95 percent headway andwillbecompleted of SouthPars phases17and18hasmade announced that thefirst drillingpackage The 17 Pars South 18 and drilling to all Iran Strategic Focus subscribers. in PDFfrom theMenaseLibrary, andisfree Moghan 1and2.Project Tracker isavailable Khorramabad, Garmsar, Dayyer, Danan,and mehr, Zavareh-Kashan, Saveh, Kouhdasht, Mehr, Alvand, Towsan, Forouz andIran- Ferdowsi, Farzad-B, Anaran, Farsi, Munir, Masjed Soleyman, Yadavaran, Golshanand Karkhed, CheshmehKhosh,Darkhovin, gan, South Azadegan,Bangestan, Band-e and Norouz, Salman,Kish,NorthAzade- and E,NorthPars, SouthPars, Soroush Douroud, EsfandiarandForouzan, SirriA contains cumulative information onBalal, Project Tracker, whichisupdated monthly, project update Upstream Pars OilandGasCompany ( 3 Special feature

) has POGC) has 4 Oil & gas 22, 23,24 20, 21 19 17, 18 13 Phase Dev Table 3:SouthPars update Kish (gasfield) Forouzan (oilfield) Dehloran (processing) Project Dev Table 2:Project tracker > > > > > > > > > > > > > > > > Early production expected next March Early production expected next March Installation of offshore pipelines begun Installation of last jacket of thesatellite platforms complete First drilling package almost complete Early production expected next March 6 Marin Ioffshore drillingrigrelocated to project site Sahar IIdrillingrigoperations begun Environmental studies underway MDP for phases2and3ready Final contract to besignedwithKhatam Al-OsiaHQshortly Talks over phases2and3on-going Drilling operation of 12wells completed 2nd jacket installed To becommissioned intwo weeks Progress at 94% elopmen elopmen Economy & business t t

8 Iran diary 9 8 www.menas.co.uk Iran Strategic Focus · June 2013 on domestic contractors inthiseffort. mcm/d byMarch 2014.POGCisrelying mainly aimed at raising production byasmuch48 cial sources to implement development plans 10 months. Thecompany willusediverse finan- offshore SouthPars gascomplex over thenext will invest $16billionindevelopment of the director Pars OilandGasCompany ( Pars to South develop Funds bcm withadditionalcompressor stations. The pipelinecapacitycould beincreased to 3 bcm ayear whereas the demandisjust 1.7bcm. gas demandcompletely, asitscapacityis2.2 the Iran–Armenia pipelinecould cover domestic ural Resources Minister ArmenMovsisyan said supplying natural gas.ArmenianEnergy andNat - growing energy demands,particularlythrough Armenia saiditexpects that Iran willsatisfy its Covering demand Armenian three months. announced bythejoint teamof experts within He indicated that details of negotiations willbe visit to New Delhi. Iranian andIndianofficials duringhisthree-day Gulf. Qasemipointed to fruitfultalksbetween development of FarzadBgasfieldinthe Persian constructive talksonIndia’spartnershipinthe announced that Tehran andNew Delhiheld Petroleum Minister Rostam Qasemihas B Farzad discuss India Iran, butane, andpentane willcommence soon. Mass production andstorage of propane, of gascondensates, and8,000b/dof propane. Commentary Mohammad Reza Zahiri saidthat Iran ) managing POGC) managing 1 Month in review ECONOMY &BUSINESS $6.2 billion)to finance economic development seven ministries to issueIRR150trillion (about The Majlesapproved abillinlate May allowing Bonds to fund economic plans uncertainty. currencies hadriseninresponse to pre-election election. Thepriceof goldcoins andforeign reacted positively to theresults of presidential Iran’s goldandforeign currency markets victory to Rohani’s Markets react categories bypaying subsidies. the government paid specialattention to these thus facingthehighest inflation rate although The goodsthat meet themost basicneedsare cent, thehighest amongallgoodsandservices. tobacco pricesexperienced inflation of 56.9per cent. Inthesameperiod,food, beverages, and months endingon20May 2013was31per The SCIalsoreported that inflation for the12 inequalities viacashhandoutsactuallybackfired. In other words, theplanto reduce income handouts inthefirst phase of subsidy reforms. analysts attribute to thedistribution of cash cent intheprevious Iranian calendaryear, which (20 March 2013).Theindex increased 7.6per areas at 0.3435at theendof thelast Iranian year Centre of Iran (SCI),puttheGiniindex inurban The latest statistics announcedbytheStatistical G Economy inbrief ini index and inflation 3 Special feature 4 Oil & gas border areas andunderdeveloped regions. and gaswater andwastewater projects in allowed to issuethebonds,especiallyto fundoil ogy, Industry andTrade, andAgriculture were Telecommunications andInformation Technol- Roads andUrbanDevelopment, Defence, plans. TheMinistries of Energy, Petroleum, Iranian automotive production fell 57.8percent D Automotive sector dependent onthemonthly payments. now accustomed to receiving itandare highly including inflation, amajorpart of society is Although distributing cashhasdisadvantages, some income groups from receiving them. forced adecrease incashsubsidiesandexcluded allocation of IRR225trillion, whichwould have The Majleshadpreviously proposed atotal > > > year (ending20March 2014)asfollows: obtained from subsidyreforms for thecurrent allocation of overall revenues of IRR500trillion To thesameeffect, the Majles approved the per month. cash handoutsat IRR455,000perperson The Majleshasapproved adecisionto leave unchanged handouts Cash government omestic production fallingomestic production IRR50 trillionto thehealthsector. IRR40 trillionto theproduction sector and IRR410 trillionto families 6 Economy & business

nal capacitydueto ashortageof capital. are manufacturingat 50percent of theirnomi- Organisation ( of theIndustrial Development andRenovation On arelated front, Gholamreza Shafei , thechair the devaluation of theIranian currency. cars spiked significantly inadelayed reaction to as thepricesof alldomestically manufactured in thefirst Iranian calendarmonth (see Table 4), production levels have remained steady. cent over thelast two years, while Renault’s Peugeot 206inIran hasdecreased by92per gaining market share intheIran. Output of the and Peugeot 206–thetop carsundertheRenault Production of theLogan (aka Tondar 90)and Iranian market share to boost Renault Source: Pro duction 21 March–20 April 201321 April March–20 automotive production, Table 4: Iranian Total Modiran Khodro Kerman Motor Bahman –50.4 Saipa –32.5 Pars Khodro Iran Khodro

Peugeot brands –indicate that Renault is ILNA news 8 IDRO), saidthat Iranian carmakers Iran diary

(+/–) change (+/–) –75.1 –77.7 –57.8 –100 >>> +84 9

9 www.menas.co.uk Iran Strategic Focus · June 2013 implementation of thesecond phaseof subsidy conditions. TheMajleshasspecifically called for measures that would furtherdamageeconomic line withaMajlesemphasisonavoiding any Experts told themediathat CBIpolicyis in rates, interest rates, orwages ‘until furthernotice.’ 1 Junethat ithasnoplansto changeexchange The N that wasallwe could do.’ we do?We didourbest to reduce inflation, but 38 percent: ‘Therate isvery high.Butwhat can be doneto curbinflation, which stands at around The official emphasisedthat nothing more can cent inthefirst Iranian calendar month. cent inthepast year, anddecreased by1.9per billion. Theliquiditygrowth rate was30.8per year (ended21March) andnow stand at at $7.2 decreased by$10billionover thepast calendar Bahmani hasannouncedthat external debts Central Bankof Iran ( figures debt External Banking andfinance and start exports –hascommenced. Iran –to diversify products, boost investment, ond phaseof theFrench company’s activitiesin director partner. market, includingsendingcarpartsto itsIranian year that itwould endallitsactivitiesinthe country, whereas rival Peugeot declared last Renault istryingto boost itspresence inthe Commentary o changes to keyo changes rates Central Bankof Iran ( Payman Kargar hassaidthat thesec - Renault Pars Company managing CBI) governor Mahmoud ) announced on CBI) announcedon 1 Month in review difficult to stabilise themarket. sequently inhard currency reserves hasmadeit 2014). Thedrop inoilexport revenues andcon- until theendof theIranian calendaryear (March stabilising inflation isa top priorityfrom now for economic affairs hastold themediathat On arelated front, theCBIdeputygovernor liquidity. macroeconomic indicators suchasinflation and reforms to bestopped becauseitcould affect to thesameperiod previous year. The main exported, a9.1percent drop invalue compared Some $6.14billioningoodsand serviceswere $11.7 billionfrom 21March to 21May 2013. tion, thecountry’s non-oiltrade amounted to According to theIranian Customs Administra- N he noted. appliances, vehicles, foodstuff, andfertilisers, of fuel,construction materials, cotton, home The transited consignments consisted mostly countries were involved. the goodswere transited byroad andthat 93 yar Afandizadeh saidthat some94percent of roads andurbandevelopment minister. Shahri- previous year, according to theIranian deputy a 10.8percent riseover thesameperiod Iranian calendaryear (21March–21 May 2013), via Iran inthefirst two months of thecurrent Over 1milliontons of goodswere transited Transit of increases goods Trade news on-oil trade trade on-oil 3 Special feature 4 Oil & gas the UAE, India,SouthKorea, andTurkey. year. Iran importedproducts mainlyfrom China, 47.3 percent declineinvalue compared to last Imports over theperiodstood at $5.69billion,a Arab Emirates (UAD), Afghanistan, andIndia. export destinations were China,Iraq, theUnited and Qatar. Russia, Kazakhstan, Tajikistan, Kuwait, Pakistan, Iraq, Azerbaijan, Turkmenistan, Afghanistan, 2013 after ChinaandIndia.Key markets are the world’s third largest exporter of cement in If thisvolume canbeachieved, Iran willbecome 4.9 milliontons over theprevious year. mad Fatemian. Thisrepresents anincrease of Minister of Industry, Mines,andTrade Moham- in thecurrent calendar year, according to Deputy Iran plansto export 18.5 milliontons of cement Cement exports could double. textile machineryfrom Indiabutthat thefigure that Iran currently imports13percent of its Textiles On arelated front, IndianDeputyMinister of Reza Tofiqi assaying. Trade Promotion Organisation deputydirector machinery,’ to barterIranian crudeoilfor Indiantextile The two countries have reached anagreement ‘Iran isamajorexporter of crudeoil to India. oil forBartering textile machinery Zohra Chatterji told reporters inTehran >>> Mehr news agencyquoted Iranian

www.menas.co.uk 6 Economy & business IRAN DIARY > > > 23 May > > 21 May > > > > > 20 May Turkish counterpart, OmarOnhun , inAnkara. ian Council for the11thpresidential election. names of candidates approved bytheGuard- Lebanon Roknabadi met UNSpecial Coordinator for representative of theUNSecretary General. met Unity (OAU) inEthiopia. anniversary of theOrganization of African ceremonies commemorating the50th arrested bytheIntelligence Ministry of Iran. Hizbullah, Mirtajeddini met thesecretary-general of Constitutional Affairs MohammadReza injured inabombexplosion inSamarra, Iraq. waters of thesouthernIranian islandof Qeshm. years inprisonfor smugglingfuelviathe Allahshukur Pashazadeh. and Sheikhul-Islamof Azerbaijan Republic, met thevisitingheadof CaucasusMuslims Saeed JaliliandMajlesSpeaker Ali Larijani National SecurityCouncil (SNSC)Secretary 11 foreign nationals were sentenced to two The Iranian Interior Ministry announcedthe Iranian ambassadorto Lebanon Ghazanfar Deputy Foreign Minister Araqchi met his Deputy Foreign Minister AbbasAraqchi President Two weapons-smuggling terrorist teamswere Visiting Iranian Vice-President for Three Iranian pilgrimswere killedand15 In separate meetings inTehran, Supreme Ján Kubiš, thevisitingAfghanistan 8 Derek PlumblyinBeirut. Mahmoud Ahmadinejadattended Hassan Nasrallah, inBeirut. Iran diary

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10 www.menas.co.uk Iran Strategic Focus · June 2013 > > > > > 28 May > > 27 May > > 26 May > 25 May > 24 May Commentary Eker inTehran. of Food, Agriculture, andLivestock Mehdi Harald V. submitted hiscredentials to Norwegian King Majles for thesecond consecutive year. Tehran. French counterpart, Jean-François Giroux , in Affairs Emile LahoudinBeirut. Roknabadi met former Lebanese president Gonbad-e Kavoos, Golestan province. Gorgan–Inche Boroun international railway in Mohamed MehdiEker. visiting Turkish Minister of Agriculture km fibre-optic network project. president the oath-taking ceremony of Ecuadorean headquarters inGeneva. Iran’s new envoy to theUnitedNations Foreign Minister Salehimet Turkish Minister Iran’s new ambassadorto Norway, MajidNili, Iranian parliamentarians elected Mohammad- Ali Larijaniwasre-elected asspeaker of the Deputy Foreign Minister for Arab andAfrican Iranian ambassadorto Lebanon Ghazanfar President Ahmadinejad inaugurated the Agriculture Minister SadeqKhalilianmet President Ahmadinejadinaugurated a5,000 Vice-President Mohsen NaziriAslwasappointed as Hossein Amir-Abdollahianmet his Rafael Correa. Ali Saeedlouattended 1 Month in review > > > > > 29 May P arliamentary Speaker , A in Tehran. Deputy Foreign Minister David Velasquez Gamedze. his visitingSwazicounterpart, Mgwagwa Tehran. his Syrian counterpart, LabanehMashouh,in him amessagefrom Larijani. Parliamentary Speaker NabihBerriandgave Speaker Reza Bahonarasdeputiesof Parliamentary Hassan Aboutorabi-Fard andMohammad- Octavian ThamrininTehran. Deputy Foreign Minister of IndonesiaYuri Minister of EcuadorAngelEnriqueArias and Foreign Minister Salehimet Venezuela’s Minister of Justice MortezaBakhtiari met Minister of Culture MohammadHosseinimet Ambassador Roknabadi met Lebanese Foreign Minister Salehimet DeputyForeign Ali Larijani. 3 Special feature li Larijani >>> Independent monthly news andanalysisof economic, politicalandfinancialdevelopments inIraq

4 Oil & gas > > > > > > 03 June > > 02 June > > 30 May

Menas conference. Asuman Kiyingionthesidelinesof the countries. off inTehran withdelegates from 40 received membersof parliament. Prime Minister AbdelmalekSellal. held aphoneconversation withAlgerian Necmettin Erbakan. Bigdeli met former Turkish primeminister Giorgi Janjgava inTehran. ambassador ambassadors inTehran. counterpart, president Hoshyar Zebari andformer Lebanese Ahmadinejad met Iraqi Foreign Minister Foreign Minister Salehimet UgandanMinister An international conference onSyria kicked Supreme Leader Ayatollah AliKhamenei First Vice-President MohammadReza Rahimi Iranian ambassadorto Turkey Ali-Reza International Atomic Energy Agency( Foreign Minister Salehimet outgoing Saudi President Ahmadinejad met various African Foreign Minister Salehimet hisIraqi In separate meetings inTehran, President Emile Lahoud. Abbass Mohammadal-Kalabi Hoshyar Zebari, inTehran. Iraq 6 Economy & business IAEA)

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> > > 07 June A > > > li A carrying pilgrimsinIraq. suicide bombershittwo passengerbuses countries. and ambassadorsfrom various Islamic met Azerbaijan MPAidinMirzazadeh. national duringprotests inAnkara. Persian GulfCooperation Council (GCC). the 127thmeeting of foreign ministers of the Hungarian president JanosAderinVienna. Mohammad-Reza Morshedzadeh,met Vienna. attended theagency’sseasonalmeeting in Iranian representative AliAsgharSoltanieh 16 Iranians were killedand44injured after Supreme Leader Khameneireceived officials Iranian ambassadorto BakuMohsenPakaien Turkish policearrested asuspectedIranian Deputy Foreign Minister Araqchi attended The new Iranian ambassadorto Budapest, sghar Soltanieh 8 Iran diary >>> 9

11 www.menas.co.uk Iran Strategic Focus · June 2013 > 10 June > 09 June > June 08 Commentary presidential electionrace. eight candidates, withdrew from the11th on theIran–Iraq border. developments. Adnan Mansourto discussregional Roknabadi met Lebanese Foreign Minister Gholam AliHaddadAdel,oneof the Iran closeditsKhosravi international terminal Iranian ambassadorto Beirut Ghazanfar 1 Month in review > > > > > ambassador to Tehran Amenhotep Zmbrano . President Gholam-Reza Ansari,inNew Delhi. Iran’s plenipotentiary ambassadorto Nepal, Syrian crisis. Minister Abdollahian met RussianDeputyForeign Iranian MPAlaeddinBoroujerdi. al-Malifi met Foreign Minister Salehiand President Ahmadinejadmet new Venezuelan Iranian ambassadorRoknabadi met Lebanese Nepali President RamBaran Yadav met Deputy Foreign Minister Hossein Visiting Kuwaiti MPAhmadAbdul-Muhsin Mikhail Bogdanov to discussthe 3 Michel Suleiman. Special feature Amir- 4 Oil & gas > > > 11 June > 12 June Tomislav Nikolic. Majid Fahimpour, met SerbianPresident ambassador to Tehran, Santiago Morao. Ghimire, whoisalsotheforeign minister. Reza Ansarimet Vice-President Madhav P. withdrew from thepresidential race. Iran’s new ambassadorto Belgrade, Foreign Minister Salehimet Brazil’s new In Katmandu, Iranian ambassadorGholam- Presidential candidate MohamdadReza Aref 6 Economy & business

> > 15 June > 14 June to celebrate Rohani’s victory. of Iran, securing51percent of thevote. polling stations throughout thecountry. ly withlocalcouncil electionsat some60,000 Iran’s presidential electionwasheldconcurrent- Massive celebrations break outinurbanareas Hassan Rohani wasdeclared president-elect >>> 8

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