Iran is expected to outline big oil and gas projects at a major industry event Wednesday ahead of a possible nuclear deal that could allow global energy giants to return.
A nuclear agreement will allow Iran to become the number one energy player in the Middle East and herald major opportunities for foreign companies, top government officials in Tehran said Wednesday.
The remarks, at an industry event, underlined the broader political and economic implications should sanctions on Iran be lifted under a deal, following long-running diplomatic efforts with six world powers.
Iran has the world’s fourth largest proven oil reserves and the second biggest gas deposits. Both are seen as long under-tapped and ripe for exploration.
But exports have halved since US and EU sanctions were imposed on Iran’s energy industry in 2012 as punishment for the country’s disputed nuclear programme.
Oil Minister Bijan Zanganeh, who as nuclear talks have progressed in recent months has signalled willingness to see global oil giants return, said cooperation was essential.
But such a prospect is inextricably linked to the nuclear deal and its June 30 deadline.
“We have to use the foreign companies that will come to us after the removal of sanctions… to increase exports and access regional markets,” Zanganeh said in a speech at Iran’s 20th Oil, Gas, Refining and Petrochemical Fair.
“It is understandable that they left us during hard times. But we hope to prepare ourselves to work with them for a future in which we become the industry’s number one in the region.”
His comments also seemed aimed at Saudi Arabia, the world’s largest oil exporter, with which Iran is locked in a fierce dispute over the conflict in Yemen, and with whom relations have been worsening.
Iran, the region’s dominant Shiite state, and Riyadh, its Sunni rival and a fellow member of the OPEC cartel, earlier accused the kingdom of dirty tricks after it refused to cut production when crude prices plummeted last year.
– ‘An even bigger power’ –
During the nuclear crisis Iran has relied on domestic oil firms and though this will continue, Vice President Eshaq Jahangiri, at the same event as Zanganeh, said: “We don’t have any option but to join the international production and distribution chain.”
New contracts prepared by the oil ministry would lure energy majors back, he said.
“We expect that after presenting the models of the new agreements, which are based on the realities of the global energy market, they will be so attractive that it will bring the foreign investment.
“Iran is very determined that after a very short period of time after signing the nuclear agreement we can take back our position in the global oil industry,” Jahangiri added.
According to the oil ministry, 1,200 Iranian companies and 600 international businesses from 29 countries including Britain, China, France, Germany, Russia, Singapore and the United Arab Emirates registered for the four-day Tehran exhibition.
“Iran has a lot of resources and they can become an even bigger power if the sanctions go,” said Gerhard Klaumunzer, a sales executive for Deep Blue Pump FZC, a Dutch-Chinese equipment firm still operating in Iran.
But with crude prices hovering around a lowly $60 a barrel as the market experiences a supply glut, the chances of a quick upturn are difficult to gauge.
While oil has long been the cornerstone of Iran’s finances, President Hassan Rouhani’s government has been seeking a more varied economy and the global fall in crude saw Tehran halve its reliance on oil income to 25 percent in this year’s budget.
Foreign energy companies, which under Iranian law must partner with local firms, are also weighing the cost of doing business against the potential returns.
Having agreed an outline framework for a nuclear deal on April 2, Iran and the P5+1 powers (Britain, China, France, Russia and the United States plus Germany) are now hammering out the details and drafting the final accord.
Under an interim deal that came into effect in January 2014, Iran has been allowed to maintain its crude oil exports at around 1.2 million barrels per day — less than half of what it was shipping in late 2011.
Production capacity is now around 2.7 million bpd but the ministry has said it could reach 4.0 million bpd within a few years.