Iran’s state-owned National Iranian Gas Co. has declared bankruptcy with more than 100 trillion rials ($4 billion) in debt, Mehr news agency reported, citing Chief Executive Officer Hamidreza Araghi.
Oil Minister Bijan Zanganeh told Mehr that the financial woes are “due to erroneous decisions made by the previous administration in implementing the restructuring of government subsidies.” That failure sparked problems in the production and distribution of energy across the country, he said.
The U.S. and European Union restrict Iran’s energy sales and the financial industry that enables payments for them because of concerns that the country is secretly trying to build a nuclear bomb, an allegation that Iran denies.
The constraints have cut Iranian crude sales by half since 2011, the International Energy Agency said, and are stifling projects to export some of Iran’s 1,187 trillion cubic feet of gas reserves, about 18 percent of the global total, as LNG. On June 17, when he was Iran’s president-elect, Hassan Rouhani said that he would seek a gradual removal of sanctions.
Company officials are working with the oil ministry and lawmakers to restructure the debt and to find new sources of revenue, Araghi told Mehr.
U.S. sanctions targeting energy investments in Iran since 1996 have narrowed the Gulf nation’s options for converting its gas resources into cash. Partners such as Royal Dutch Shell Plc, Repsol SA and Total SA abandoned plans for LNG ventures there, depriving Iran of the buyers as well as the money and expertise needed to make and sell the fuel.