WASHINGTON (Mint) — Despite forecasts that investment in Iran’s oil sector will not increase until 2021, the country is gearing up to introduce foreign governments and countries to prospects for investment and collaboration in its oil, gas, and petrochemical sectors at a summit in London in February 2015.
The event –Iran Oil & Gas Summit — is being billed as an opportunity for attendees to network with the most influential people in Iran’s oil sector, including delegates from the National Iranian Oil Company and its petroleum engineering and gas subsidiaries.
“The event will be an opportunity for the Iranian authorities to show their resolve in attracting foreign investment into the Iranian petroleum industry,” said Bijan Khajehpour, managing and founding partner of Atieh International, the overseas arm of a group of consulting firms based in Tehran.
In an interview with MintPress News, Khajehpour said, “There was a similar event in 1998 in London that was the starting point for a wave of investments from international oil companies in Iran.” One such investment came from Total, a French company whichsigned a $2 billion deal with Iran at the time. The Clinton administration claimed that the deal violated theIran Sanctions Act but then waived sanctions for the company.Other companies that made deals with Iran’s oil sector in the 1990s include Royal Dutch Shell, Norway’s Statoil, Italy’s ENI, and Petronas of Malaysia.
However, business became more difficult in the 2000s as the United States engineered a flood of United Nations sanctions, convinced European countries to introduce bans on economic projects with Iran, and prohibited “banking transactions with Iran’s central bank,”according to Nader Habibi’s essay in “Iran and the Global Economy.” (Habibi is a professor of Middle East economics at Brandeis University.)
Nevertheless, a potential post-sanctions Iran wants these companies back,and said as much in December of last year. The country named Total, Shell, ENI, Statoil and BP, along with American companies Exxon Mobil Corp. and ConocoPhillips, as companies it wants to invest in its oil and gas sectors.
To attract companies, Iran’s Ministry of Petroleum “has drafted a new, more investor-friendly contractual framework” that it plans to introduce at the Oil & Gas Summit, according to Khajehpour. In February, the Islamic Republic revealed an investor arrangement that would allow foreign companies to explore, develop, and produce oil in joint ventures with the Iranian government. Such endeavors have not been legal in Iran since 1979, according to Sara Vakhshouri, president of SVB Energy International and a former adviser to the director of the National Iranian Oil Company International.
The role of geopolitics in investment
Khajehpour believes this is just the beginning, though.
“There are a number of reasons why the level of political interaction between the West and Iran will increase and it is clear that improved political relations will pave the way for enhanced trade and investment relations,” he said.
He told MintPress that the core drivers for improved relations will come from shifting geopolitical concerns. By this, he means the rise of groups, such as the Islamic State, which represents a common threat to both U.S. interests and Iran, instability in other Middle Eastern countries, and the United States’ deteriorating relationship with Russia. Indeed, Max Fisher penned an article for Vox on Monday titled “Obama’s new ISIS strategy is good news for Assad, and he knows it.” This would mean that Obama’s Islamic State strategy is also good news for Iran because it is backing the Syrian government.
“Events in the MENA [Middle East and North Africa] region and also in Russia have dealt a blow to many international enterprises who were active in those markets,” Khajehpour also noted. “When one asks oneself where there are new markets to compensate for the losses, Iran would be at the very top.”
In other words, Khajehpour is saying that the Obama administration has an incentive to repair relations with Iran in order to feed corporate investors that have lost out due to increasing turmoil in the Middle East and between Russia and the West.
A looming deadline
However, everything hinges on a comprehensive deal to be brokered between the P5+1 countries (China, France, Russia, the U.S., the United Kingdom, plus Germany) and Iran by Nov. 24, the deadline for a comprehensive deal.
“I think it’s, at best, 60/40 at this point. There are good reasons, of course, to get it, but there are problems emerging right now, so it’s not a done deal in any way, shape, or form,” Trita Parsi, president of the National Iranian American Council, told MintPress in regards to the current state of negotiations.
“There’s still some key variables between the two sides when it comes to research and development, when it comes to the number of centrifuges, that the Iranians can operate. There’s a big problem when it comes to those issues. And, at the end of the day, it’s going to require a tremendous amount of political wisdom and courage on both sides in order to reach a lasting compromise.”
Khajehpour is slightly more optimistic. He expects a comprehensive deal to be reached before the November deadline and a new era of relations between the U.S. and Iran to develop — an era that will slowly see the end of sanctions. He explained that there’s political will from key figures on both sides, pointing out that “even a crisis like the Gaza war did not manage to derail these negotiations.”
When asked about the proposition that Iran would not see sanctions lifted on its oil and gas sector until 2021, Parsi said that he doesn’t believe that would happen. Rather, he believes sanctions on those sectors will be lifted in “two, two and a half years.”
“It’s going to be very tough for the U.S. to postpone big decisions like this to the next administration, and as a result, that could jeopardize the entire deal, so it seems more feasible to actually take care of everything while Obama is still in office,” Parsi said.
The bomb
Officially, sanctions were ramped up against Iran because the International Atomic Energy Agency was unable to verify whether or not the country’s nuclear power program was intended strictly for peaceful purposes. However, that narrative has been challenged by several authors and analysts, who argue that Iran’s nuclear power program has been used by the IAEA for the U.S. and Israel to gain leverage over the country for their own geopolitical interests.
Paul Pillar, former deputy director of the CIA’s Counterterrorist Center, explained the situation best at the National Summit to Reassess the U.S.-Israel “Special Relationship” when he commended the preliminary agreement made in November of last year between Iran and the P5+1 countries, saying that it achieved most of everything needed to ensure Iran’s nuclear program is unable to produce a weapon.
The agreement “got most of what we need to get in terms of enhanced inspections, putting a cap on the low-enriched uranium, in terms of doing away with the medium enriched uranium, [and] having restrictions on any further advances that mean anything at their nuclear reactor,” he said.
He continued, saying that if the Israeli government’s sole motivation was to stop Iran from building a nuclear weapon, then it would embrace nuclear negotiations because they are “clearly the best chance to cap and control” the program. However, it has instead focused on sabotaging and undermining the talks through promoting legislation in the U.S. that would have that effect. He believes that Israel’s main objectives in keeping the Iranian nuclear weapons issue alive are to distract the public from focusing on the occupation of Palestine and to keep Iran ostracized by the international community so that it does not become a competitor for influence with the U.S.
According to U.S. intelligence, Iran has not decided to build a nuclear weapon.
