Iranian Shipbuilding Industry
Iran has a sprawling shipbuilding industry, chiefly devoted to constructing oil tankers and container ships as well as offshore structures. The country owns the world’s largest fleet of oil supertankers consisting of 42 VLCCs, each able to carry 2 million barrels of oil. Iran’s shipbuilding industry is chiefly devoted to constructing oil tankers, container ships and offshore structures.
Iran has thousands of kilometers of coastlines at the north and the south put together. In both the northern and southern waters, the Caspian, and the Persian Gulf and Sea of Oman, and especially in the south, there is heavy traffic of ships and cargo which provides ideal conditions for a shipbuilding/repair industry to develop. Traditional shipbuilding was confined to wooden ships, down to late 19th century, although the wooden sail driven (wind-powered) ships became very sophistical in the West, particularly from the Renaissance period onwards. With the advent of steel as the material for building the hull, and steam engines as the source of the driving power, the 20th century witnessed a long line of increasingly more sophisticated ships emerging one after another, and traditional shipbuilders lost the technological competition.
The Iranian navy is rebuilding and modernizing itself along with Iran’s other programs focusing on nuclear weapons and long-range ballistic missile building efforts. As most of Iran’s oil exports and trade pass through the Strait of Hormuz, the vital importance of the Persian Gulf is an obvious reason for its modernization efforts after the Iran-Iraq war. Iran’s technology transfer from China, North Korea and Russia is well known. In addition, its indigenous shipbuilding efforts have proven fruitful. Bandar Abbas is the largest and most strategically-located naval base in Iran. It is on the mainland north of the Strait of Hormuz, approximately 30 NM from the shipping lane center. It is the headquarters of the Iranian Navy and responsible for the 1st Naval District. A major portion of Iranian shipbuilding facilities and dockyards are located here as well as many major naval assets.
In 2009, in a move aimed at further enhancing Iran's shipbuilding industry, President Mahmoud Ahmadinejad said he will ban the purchase of foreign ships by Iranian organizations. The Ministry of Commerce confirmed that Iran is able to build all its needed sea fleets inside the country.
The move made by a number of western states to impose a ban on Iran's shipping lines and activities is destined to failure, Iranian Minister of Commerce Mehdi Qazanfari stressed 01 June 2010. "These countries will not be successful in restricting Iran's trade and shipping activities and Iran will manage its sea transportation and trade system more powerfully than before," Qazanfari said, addressing a ceremony held in Iran's southern port city of Bandar Abbas Monday evening to mark endorsement of documents of two Iran-made ocean liners.
The ocean going ships, namely Iran-Arak and Sadra, had been built by Iranian experts and joined the country's shipping lines very recently. Qazanfari underlined that the advancements made by Iran in shipyard industries would strengthen Iran's sea transportation, and noted, "Ill-wishers should know that the Islamic Iran has not only brought its sea transportation system to strength in a proper way but is also able to build its needed sea fleets inside the country." He called on Tehran's opponents to get the message and start just and fair interactions with Iran to avoid further losses.
The Iran Freedom and Counter-Proliferation Act of 2012, focused on significantly reducing foreign support to the ports, energy, shipping or shipbuilding sectors in Iran; as well as prohibiting petroleum purchases from Iran and related financial transactions, transactions in natural gas to and from Iran, trade in precious metals, and providing insurance, reinsurance and underwriting services to Iranian entities.
In response to concerns about Iran's proliferation-sensitive nuclear activities, the EU gradually introduced comprehensive restrictive measures since 2007. They implement UN decisions, but also include strong EU autonomous measures. These measures consisted in, among many other items, a ban on supplying key naval equipment for shipbuilding and maintenance to Iran.
At the beginning of 2012, the US and EU imposed sanctions on Iran’s economic sectors with the goal of preventing other countries from cooperating with the Islamic Republic in those sectors. The sanctions were imposed over allegations about possible diversion in Iran's nuclear program toward military objectives. Iran categorically rejected the allegation.
Iran and the P5+1 group of countries – the US, the UK, France, Germany, Russia and China – reached a mutual understanding on 02 April 2015 in the Swiss city of Lausanne as a prelude to a comprehensive deal before a self-designated deadline at the end of June 2015. A key point of Lausanne statement was a promise to lift a series of sanctions on Iranian economy.
The Islamic Republic of Iran is one of the pioneering countries in the field of building all kinds of ships and other maritime structures, despite sanctions imposed on the country over its peaceful nuclear program. Head of the shipbuilding committee of Iranian Association of Naval Architecture and Marine Engineering said on 03 May 2015 that Iranian specialists are currently capable of building all kinds of vessels, having reached self-sufficiency in the field as a result of unjust sanctions imposed on the Islamic Republic.
Peiman Massoud-Zadeh noted that the sanctions imposed on Iran prompted Iranian engineers and industrial sector to rely on domestic capabilities in order to overcome the existing restrictions. Expressing hope about possible removal of sanctions as a result of recent breakthroughs in nuclear talks with world powers, the official said after the removal of sanctions, all opportunities should be taken advantage of for the progress of Iran's shipbuilding industry.
Massoud-Zadeh, however, cautioned that even when sanctions are removed, “we must first rely on domestic capabilities and then make suitable plans for strategic fields and sectors in order to build new capacities in those sectors.... Otherwise, we will not only lose opportunities that may be available to our shipbuilding industry, but also witness the decline of this important and strategic industry and even become more dependent on other countries”.
The official noted that although the country is capable of building any vessel, it would be more economical if big ships were built as joint venture with foreign builders in order to reduce time and cost of shipbuilding projects. He added that even when vessels are built through orders to other countries, the projects “should be done in cooperation with domestic manufacturers in order to pave way for technology transfer.” Despite sanctions imposed on Iran, the country had broken new grounds in all industrial sectors, including shipbuilding, during recent years. The country launched its first domestically-manufactured ocean-going tanker in the Persian Gulf waters in early 2013.
In July 2015, Iran and the E3/EU+3 – France, Germany, the UK and the EU plus China, Russia and the USA – signed the Joint Comprehensive Plan of Action (JCPOA), a landmark agreement to ensure the peaceful nature of Iran's nuclear program in exchange for the termination of restrictive measures against Iran. European companies entered into important commercial and investment agreements with Iran, worth billions of euros.
Iran looked to the lifting of sanctions to unveil a series of grand projects in partnership with major world shipbuilders, including South Korea’s Hyundai and Germany’s Nordic Yards Wismar, a senior official said 22 November 2015. Talks have been held with South Korean, Italian, Chinese, German and Turkmen companies to implement joint schemes, Managing Director of Iran Shipbuilding & Offshore Industries Complex Co. (ISOICO) Hamid Rezaian said.
Daewoo Shipbuilding and Marine Engineering Co., Ltd. (DSME) said 31 December 2016 it had signed an agreement to help develop Iran's shipbuilding industry. The South Korean shipbuilder signed the deal with IDRO to establish a joint venture company that will develop an Iranian shipyard in cooperation with DSME’s Okpo shipyard. The joint venture company will engineer and build the types of ships needed by Iran, DPME said. Since 1983, DSME has delivered 38 ships valued at $1.65 billion to Iranian companies, including the Islamic Republic of Iran Shipping Line (IRISL) and the National Iranian Tanker Company (NITC).
But following the re-imposition of US sanctions, many of these deals are under threat. Following President Trump's announcement on 8 May 2018, all US sanctionslifted under the JCPOA will be reinstated after a 90-day or 180-day wind- down period, and with full effect. From 5 November 2018, the US re-imposed sanctions on Iran's port operators, and shipping and shipbuilding sectors, including the Islamic Republic of Iran Shipping Lines (IRISL), South Shipping Line Iran, or their affiliates.
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