With the Iran nuclear deal’s future still uncertain, the Middle Eastern country has an assortment of deals with major oil and gas companies stuck in wait-and-see mode.
Amir Hossein Zamaninia, Iran’s deputy oil minister for trade and international affairs, stated that the country was in the midst of negotiating contracts with more than 15 companies from Europe, Russia, and Asia which would open up the country to immense oil and gas exploration and development.
“These are not overambitious figures and expectations,” he stated at a conference in London, “Our policy is to be able to manage finalize at least 10 contracts by the end of the Iranian year (March 2018).” So far Iran has signed investment intentions for 28 separate projects with companies such as Total, Eni, Shell, Russian heavyweights Rosneft and Lukoil, China’s Sinopec and China National Petroleum.
Most notably is Iran’s oil and gas development with Total, signed in July. The agreement, worth $4.8 billion, will see the French oil and gas company develop and operate (in conjunction with CNPC and Iranian oil company Petropars) the South Pars project which operates in the world’s largest natural gas field. Total was the first major western oil company to re-enter Iran following the lifting of international sanctions as a result of the Iran nuclear deal.
The South Par project is expected to have the capacity to produce 400,000 barrels a day. Upon signing the deal, total said the resulting gas will supply the domestic Iranian market in 2021.
The threat of renewed sanctions, which would limit international company’s ability to business in and with Iran, looms in the distance as President Donald Trump continues to threaten to terminate the agreement. In response Ayatollah Ali Kahmenei, Iran’s supreme leader, said Wednesday that Tehran would adhere to the terms of the deal unless the U.S. pulls out, at which point he would “shred it.”
Nonetheless, Iran’s deputy oil minister downplayed the impact of U.S. sanctions stating. “It has little or no effect on our future plan in the oil industry…I am ready for negotiations with oil companies.”
Sharing that sentiment, oil minister Bijam Zanganeh personally invited the business of U.S. oil and gas companies stating, “American companies can come to Iran and benefit so Mr. Trump won’t be so upset.” Later adding, “We don’t have any restrictions for working or negotiating with American companies with the intention of developing the oil and gas resources of Iran. If they want, we are ready to negotiate with them tomorrow.”
Still, with this renewed instability and the unknown scope of new sanctions the damage to Iran’s oil market remains to be seen.
Article written by HEI contributor Kevin Abbott.