Monday, 27 March, 2017

European and American Oil Companies Eye Lifting of Iran Sanctions

Iranian leaders have welcomed American oil companies to enter Iran, upon the condition that sanctions are lifted, Huffington post newspaper reported on Monday.

According to the report, Iranian Oil Minister Bijan Zanganeh stated to Iran’s media “We welcome the presence of American oil companies in Iran,” adding, “we will definitely prepare the grounds for the presence of American oil companies in Iran.”

One of the advantages of the final nuclear deal for the Islamic republic is the short-term and immediate benefits such as receiving billions of dollars which have been frozen due to economic sanctions, the author Dr. Majid Rafizadeh believes.

Royal Dutch Shell PLC, which owes the Islamic Republic an outstanding debt of more than $2 billion, has been talking about repaying Iran after the nuclear deal is signed, and consequently the related sanctions are lifted.

Iranian Oil Minister recently met with Shell’s Chief Executive Ben van Beurden, the report added.

Beurden pointed put that he is giving “assurance that payments will be made [to the Islamic Republic] as soon as they can be made.” Moreover, Zanganeh met with other Western companies in a summit of the Organization of the Petroleum Exporting Countries.

 Iranian official reciprocated Tehran’s interest in working with super-major oil and gas companies offering “more attractive” contracts.

Several foreign companies were unable to pay Iran for its deliveries due to the financial and banking sanctions imposed by the United Nations Security Council as well as due to unilateral American economic sanctions imposed on the Islamic Republic due to its nuclear defiance, Rafizadeh writes.

According to some news, western companies including Shell and BP have already shown interest to re-enter Iran’s oil market as soon as a final nuclear deal is reached and issues of economic and banking hurdles are resolved.

After several decades, this is the first time that Western super-major oil and gas corporations are openly and publicly expressing their interest to access Iran which enjoys the world’s second-largest natural-gas and fourth-biggest oil reserves.

Iranian leaders will attempt to use the short term nuclear deal as a platform to seal long term oil contracts, which will institutionalize the profits for many years to come. This will make it more difficult for sanctions to snap back in case Iran defied the terms of nuclear deal. Iran’s oil ministry is looking for roughly $200 billion investment in order to revive and rehabilitate its oil industry. Iran has been publicizing and circulating its oil and business contracts. As Zanganeh stated, the new contracts are “long-term, with better situations, rather than the previous framework that we have.”

 In total, both Western oil and gas companies and Iran are openly expressing interest in cooperating with each other, as Tehran will gain legitimacy from the final nuclear deal.

This suggests a crucial issue. OPEC members ought to be prepared and chart ways for Iran’s full return to the oil market. As an Iranian delegate pointed out “Iran is telling other OPEC members to get ready for its return”. Iran is planning to boost exports by one million barrels a day after sanction are lifted. Currently, Iran’s oil production is roughly 2.7 million barrels a day and it oil exports is approximately 1 million barrels a day.

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