On Aug. 18, Iranian officials announced that they had now put in place the infrastructure to swap up to 500,000 barrels per day (bpd) of crude oil with its Caspian neighbors. Under these agreements, Iran would receive crude oil from Caspian producers at the northern port of Neka, feed that crude to northern refineries and then allocate crude oil from southern terminals to international clients designated by the Caspian producers.
Prior to 2010, Naftiran Intertrade Company (NICO), a subsidiary of the National Iranian Oil Company (NIOC), oversaw this practice. In 2010, Tehran stopped the swap arrangement, arguing that the $1 a barrel fee charged had to be increased and based on the international crude oil price. Tehran realized that the Caspian producers’ alternative route would be to use the Baku-Tbilisi-Ceyhan pipeline at a much higher cost.
