Iran to Sign More Oil Deals "Within Weeks"

EghtesadOnline: The Iranian government is negotiating oil projects worth $200 billion with 27 foreign companies, deputy minister for international affairs, Amirhossein Zamaninia, said on Tuesday, and some of those deals could be struck very soon.

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15 July 2017

France's Total and China's state oil company CNPC signed a multibillion dollar deal last week to develop the country's giant South Pars Gas Field, the first investment of its kind since sanctions on Iran were relaxed last year.

"I can assure you this is not the last one," Zamaninia told CNNMoney Emerging Markets Editor John Defterios at an oil conference in Istanbul, Turkey. "We will see other contracts being made within the next few weeks."

Zamaninia said Iran was talking to companies in Europe and Asia, including BP, Russia's Gazprom and Lukoil, and Malaysia's Petronas, among others. He did not mention any American companies. Lukoil declined to comment on the details of the talks, but added that it had previously expressed an interest in developing two fields in Iran. BP, Gazprom and Petronas did not immediately respond to requests for comment, according to Financial Tribune.

Investment Logjam

International economic sanctions against Iran were eased in early 2016.

US President Donald Trump had previously threatened to scupper the nuclear deal, which was negotiated by the Obama administration. But in May, Trump signed a series of waivers without which sanctions would be reimposed.

That appears to have broken the investment logjam, sending an important signal to companies eager for access to Iran's huge energy reserves.

"Many did not say they were waiting for President Trump to sign the waiver, but in reality they did," said Zamaninia. "After his signature ... these negotiations took place."

The US still has restrictions in place that block most American companies from investing in Iran. And some western companies have been reluctant to jump in since there are still restrictions on doing business with Iran in US dollars.

"One of the silver linings of sanctions unduly caused on Iran was that we relied on our own engineering base and increased our production and at the same time decreased our reliance on oil and gas from 43% to 29%," Zamaninia said.

Iran has significantly ramped up its energy production since the sanctions were relaxed. It was granted an exemption from an OPEC deal where the members agreed to cut production to reduce a supply glut.

Oil prices have not received the boost OPEC had hoped for and are still trading around $44 a barrel.

"There is an oversupply of oil in the global market but we think by the end of 2017, the last quarter, we would see a better result in terms of oil prices," Zamaninia said.

Zamaninia also said on Wednesday that Iran's oil output will rise to around 4 million barrels per day by the end of the year, as the OPEC member tries to ramp up production after years of international sanctions.

"By the end of 2017, we hope to reach about 4 million barrels per a day," he said.

Iran has been producing around 3.8 million barrels per day in recent months.