South Pars Bond Sale Falls Short As 75% Remains Unsold
The National Iranian Oil Company (NIOC) has largely failed to attract interest from investors in its IR5 trillion ($455.5mn) bond issue, which was floated on the market on 26 November. This represented the country’s latest move to raise funds in the face of tightening international sanctions. After an initial five working day period to market the bonds, Iran’s semi-official Mehr News Agency reported that the company had only managed to sell 18% of the issue. NIOC asked the Central Bank of Iran (CBI) on 2 December to extend the offer period for a further two working days, but managed only to sell an additional 6% of the original issue, thereby making it a total of 24% sold.
State-controlled broadcaster IRIB reported on 28 November that NIOC had begun its IR5 trillion bond-selling program at 262 branches of Iran’s Tejarat Bank nationwide, to raise funds for investment in projects relating to its massive offshore South Pars gas field. With the current uncertain economic situation in Iran, domestic and international investors seem to be reluctant to lend to the Iranian government. Local experts however are attributing the lack of demand for the new paper to the low rate of yield compared to the high returns investors can reap in Iran’s gold markets.
NIOC has revealed it is to offer up to IR40 trillion ($3.64bn) in rial-denominated bonds before the end of the current Iranian year (20 March 2012) in order to speed up the implementation of existing and planned projects in Iran’s beleaguered oil and gas sector. What’s more, the state-owned oil company is also said to be planning to invest some $16bn in the development of future South Pars phases, for which NIOC is hoping to raise around $4-5bn from similar bond offerings.
NIOC Invites Private Sector Cooperation For Oil, Gas Field Development
In a related development, NIOC Managing Director Ahmad Qalebani has said that the state-controlled entity would welcome any cooperation from the country’s private sector in developing a range of its oil and gas fields. Speaking in Tehran on 7 December, he was quoted by Shana as saying: “Developing joint oil and gas fields is the first priority of the country’s oil industry.” Further to this, Mr Qalebani noted that the NIOC is ready to conclude several buyback contracts with domestic investors, and added that a number of new policies have recently been implemented to support those domestic manufacturers dealing in the production of equipment related to both the oil and gas industries.
Copyright MEES 2011.
