Oil giants to come back to Iran

EghtesadOnline: President of Middle-East & North-Africa Total Exploration & Production, Stephane Michel, said on Saturday that oil giants are in competition to come back to Iranian market.

News ID: ۷۳۷۴۱۷

09 October 2016

The Persian daily, Iran, quotes Michel as saying that in the wake of lifting the sanctions and implementation of the Joint Plan of Action (JCPOA), Iran's international relations have undergone major change.

The ice of economic and commercial relations between Iran and other countries in the years of sanctions are getting melted, reports ILNA.

He said that the oil industry, standing as the most important source of income for Iran, was one of the Iranian economic sector which suffered from the sanctions.

Under sanctons, oil production fell down due to restrictions on oil exports due to lack of proper and timely investment to the extent that export of gas lowered to less than one million bpd from more than 2.2 million bpd.

However, good predictions were envisaged for the propspects of Iranian oil economy were made in 2014. In addition to reforms in government's macro policies, which led to considerable growth in oil production even before lifting the sanctions, new atmosphere was created for return of investors and oil giants to Iran.

From the early days of the the nuclear deal, directors of the the international companies active in oil industry visited Tehran along with their respective country's economic delegations and voiced interest in resumption of the ties cut-off for years.

Officials of the most reputable European oil companies held talks with Iranian officials. Total SA of France, the world's fourth major oil company that signed four contracts with Iran in the years prior to sanctions, is willing to come back to Iran.

The subject of the first contract is purchase of 160,000 bpd oil from Iran by Total, indicating the company's interest. In the post-sanctions era, Total team of experts and senior officials visited Iran four times following up issues of mutual interest.

This time reporters went to the 46-storey building of Total in Paris to hold talks with the senior officials. Michel took part in the Q&A session with reporter of the Persian daily of Iran.

During the interview, the senior director of Total said that the French company is highly willing to return to Iranian oil industry. He said that all the world oil giants have got prepared for entering Iranian oil industry and are competing with each other.

Michel said Total team of managers set two main conditions for resumption of ties with Iran and that fortunately two of the conditions have been met. The first condition of Total was elimination of international sanctions on Iran, that was met in January 2016, and now all sanctions are lifted.

The second condition was related to oil contracts. According to the Total official, Iran's previous contracts, which was the basis of cooperation with foreign companies, was based on the buy-back model, being less beneficial for the foreign party.

For this reason, foreign companies had called for amendment of Iranian oil contracts.

Of course, Iranian government had prior to the sanctions lifted, decided to attract foreign investment.

After months of debate and approval of the new model of oil contracts, the so-called IPC, the contracts were finalized and published.

In an interview with Iran, Michel reiterated Total's willingness for presence in Iranian oil industry.

'We are fully prepared for beginning projects and signing contracts with Iran. We are only waiting release of the new oil contracts to foreign companies. Total is ready for cooperation in oil production and exploration, willing to enter Iranian petrochemical industry.'

The Total of France official said that the contract for joint production of engine oil, signed several years ago between a private Iranian company and Total, will be activated.

The gas industry is also one of the main priorities of Total for investment in Iran.

Of course, the point Michel is stressing is transfer of the technical and engineering know-how.

The director said the MoU signed between Iranian Ministry of Petroleum and the company was enforced during visit of Iranian president to Paris.

He added that since the deal was signed, Total team of experts launched needs assessment job on the projects for cooperation, amount of investment and the technology.

Noting that Iran is a big country and is an influential player in energy for enjoying giant oil and gas reserves, Michel said Total SA of France can meet part of the investment needed for the oil projects, in parallel with transfer of technology and know-how.

He noted that of course, due to the world's economic recession over the past several years, investment has been on the downward trend so far.

In 2014, Total SA of France made more than 28 billion euros investment and it is predicted that the figure will rise to 15 billion to 17 billion euros in 2017.