Iranian oil bourse

The Iranian Oil Bourse[1] (Persian: بورس نفت ایران) International Oil Bourse,[2] Iran Petroleum Exchange or Oil Bourse in Kish[3] (IOB; the official English language name is unclear) is a commodity exchange which opened on February 17, 2008,[4][5][6][3]. It was created by cooperation between Iranian ministries and other state and private institutions. The IOB is intended as an oil bourse for petroleum, petrochemicals and gas in various currencies, primarily the euro and Iranian rial and a basket of other major currencies. The geographical location is at the Persian Gulf island of Kish which is designated by Iran as a free trade zone.[7]
During 2007, Iran asked its petroleum customers to pay in non-dollar currencies. By December 8, 2007, Iran reported to have converted all of its oil export payments to non-dollar currencies. [8] The Kish Bourse was officially opened in a videoconference ceremony on February 17, 2008, despite last minute disruptions to the internet services to the gulf regions. Currently the Kish Bourse is only trading in oil-derived products, generally those used as feedstock for the plastics and pharmaceutical industries. However, officially published statements by Iranian oil minister Gholamhossein Nozari indicate that the second phase, to establish trading in crude oil directly, which has been suggested might one day perhaps create a "Caspian Crude" benchmark price analogous to Brent Crude or WTI will only be started after the Bourse has demonstrated a reasonable period of trouble-free running. [9]
Contents[hide]
1 Background
2 Operations
3 Timeline
3.1 Opening ceremony
4 See also
5 Citations
6 Literature
7 External links
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[edit] Background
The three current oil markets are all US dollar denominated: North America's West Texas Intermediate crude (WTI), North Sea Brent Crude, and the UAE Dubai Crude. The two major oil bourses are the New York Mercantile Exchange (NYMEX) in New York City and the IntercontinentalExchange (ICE) in London & Atlanta. As the Oil Bourse in Kish is developed through successive stages, the plan is to establish a Petrobourse as a fourth oil market, denominated by the Iranian rial, the euro and other major currencies.

[edit] Operations
See also: Foreign Direct Investment in Iran, Tehran Stock Exchange, and Privatization in Iran
At the time of the Oil Bourse's opening on Kish, the Director of the Kish Stock Exchange, Hossein Allahdadi, said that there "are no limitations imposed on transactions by foreign shareholders at the Oil Bourse in Kish".[3]

[edit] Timeline
The Iranian oil bourse, first reported in 2005, initially had a widely publicised opening date of March 20, 2006 [10], which is the Iranian New Year, Nauroz. According to an April 2005 report, the Tehran Stock Exchange (TSE), the Wimpole Consortium and a private staff fund for retired petroleum workers were to form a consortium developing the exchange [11].
January 2006 Chris Cook of the Wimpole Consortium referred to delays in the process due to the election to the presidency of Mahmoud Ahmadinejad and subsequent difficulty in appointing a new oil minister acceptable both to the president and parliament [12].
March 2006 the Petroleum Minister of Iran, Kazem Vaziri Hamaneh, announced that due to "technical glitches", the Bourse launch was postponed, with no new date set. [13]. However, as of April 26 Iran had restarted its move to open the oil market, and Kazem announced the bourse was set to open the first week of May [14].
May 2006 Minister of Economic Affairs and Finance Davoud Danesh-Jafari said the Oil Ministry has a two-month deadline for presenting the Articles of Association of the Iranian Oil Bourse. Danesh-Jafari said that the euro had not yet been finalized as the legal tender of transactions in the oil bourse, and the final decision about that depends upon the Oil Ministry’s proposed IOB Articles of Association [15]
During the first phase of its implementation, the Iranian Oil Bourse plans to offer financial derivatives relating to crude oil.
July 2006 a building has been purchased and the projected opening date was originally slated for September 2006. [16] On September 15, Oil Minister Kazem Vaziri-Hamaneh stated that all preparatory requirements had been arranged for launching the oil stock market in the country.[17] However, the launch has still not occurred.
December 2006 Bloomberg cited two Iranian newspapers reporting Iran's Minister of Economy Davoud Danesh-Ja'fari Iran as wanting to cut US dollar based transactions to a minimum.[18]
March 2007 Tehran based Press TV reported that the Iranian Embassy in Baghdad announced a shift of its major currency from dollars to euros. Iraqis traveling to Iran will pay for a visa in euros in line with other Iran Embassy locations. [19]
March 2007 The Scotsman reported that China's state-run Zhuhai Zhenrong Corp, the biggest buyer of Iranian crude worldwide, began paying for its oil in euros late last year. Iranian officials have said for months that more than half the OPEC member's customers switched their payment currency away from the dollar as Tehran seeks to diversify its reserves, but news of the Zhenrong change is the first outside confirmation. Japan has also announced that it would be willing to switch to Yen from US Dollars.[20] Iran's central banker announced in March 2007 that Iran had cut its holding of U.S.-dollar assets to around 20% of its foreign reserves in response to U.S. hostility.[21]
July 2007 Iran asked Japan to pay for its oil purchases in Japanese Yen.[22]
September 2007 Japan's Nippon Oil has agreed to buy Iranian oil using yen. [23]
December 2007 Iran stops accepting U.S. dollars for oil. [24]
January 2008 Iran's Finance Minister Davoud Danesh-Jafari told reporters that the bourse will be opened during the anniversary of the Islamic Revolution (February 1-11). [1].
February 2008 On February 4, the Iranian Cabinet approved the creation of the oil bourse in two stages - first a raw oil exchange and secondly an oil byproducts exchange. The Ministry of Finance and Economics, the Oil Ministry, the Ministry of Foreign Affairs, and the Central Bank of Iran are required to create a workgroup to coordinate the project, and the Iran Commodities Bourse Company is given the task of carrying out the project. The communique from the Cabinet states that the "Ministry of Finance and Economics is required to take measures in making the petrochemical byproducts bourse operational by the end of February 2008." [25]

[edit] Opening ceremony
On February 17, 2008, the Iranian Oil Bourse was inaugurated in a video conference ceremony from the capital Tehran attended by ministers of oil, finance and economic affairs as well as chairman of Iran's Stock Exchange and a number of other officials and financial experts.[4] The transactions will be made in Iranian rial, yen, euro and other major currencies.[5] The Iranian Oil Bourse will probably accept Russian ruble as well.[6] The first transaction of the IOB took place at 9:30 the following morning, when 2200 tonnes of low density polyethylene (LD-PE), held in 100 tonne cases, were traded.[3]
November 2008: According to Chairman of Board of Directors for Iranian Oil Bourse Mehdi Karbasian ever since the launch of the first phase of the bourse, transactions worth over $1.5 billion have been made on different oil and petrochemical products