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Iran is ready to swap 500,000 bpd of oil with its fellow Caspian Sea countries, Iranian Fars news agency reported on Friday, quoting a senior official.

According to Hamid Hosseini, head of the North department at Iranian Oil Pipeline and Telecommunication Company, a 272-km (169 miles) pipeline has been built to ship crude oil from the Neka terminal on the Caspian Sea to a Tehran refinery.

Under the swap deals, refineries in Tehran and Tabriz use the swapped oil, while Iran delivers the same amount it receives via the Kharq Oil Terminal in the Persian Gulf.

Last week, Iran resumed the oil swaps in the Caspian Sea after a 7-year suspension, Platts reported, quoting the National Iranian Oil Co.

Several oil tankers have already been offloaded at the Neka terminal, the Iranian company said, but did not name the countries with which it had resumed swap deals.

Before the hiatus, Irans main swap deal partners in the Caspian Sea area were Kazakhstan, Turkmenistan, and Azerbaijan.

Iran stopped the oil swap deals in 2010, when then-oil minister Massoud Mir-Kazemi said the agreements were losing money rather than generating profits. The volume of the oil swaps then was between 70,000 bpd and 100,000 bpd.

For Iran, the swaps with Caspian producers meant that Tehran could supply northern areas with oil processed at the Tehran, Tabriz, and Arak refineries without having to transport it all the way from wells in the south.

Related:Aggressive U.S. Oil Sanctions Could Bankrupt Venezuela

According to Platts, Iran had been negotiating over the past four years the resumption of the oil swap deals with Kazakhstan, Russia, and Turkmenistan.

Now that most of the Western sanctions on Irans oil have been lifted, Tehran is targeting to add 700,000 bpd to its overall production capacity, which is expected to rise to 4.7 million bpd by 2021.

By Tsvetana Paraskova for Oilprice.com

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