Established in 1961, Atlantic Council offers consulting services on
international issues. It organizes annual conferences on different issues. It
last held an energy conference in Istanbul this summer. Representatives of
major oil and gas companies, senior analysts and energy officials from a
variety of countries attended the event. The conference focused on energy
market, particularly gas and renewable energies.
Iran was highlighted in this conference. In the post-sanctions era,
gas-rich Iran is reentering world energy market.
Over the past four years, Iran has put a great effort into reshaping its
energy policy, tempting foreign investors back and revitalizing its oil and gas
industry. Hence, it reconsidered its ambitious project to export gas to Europe.
Iran's abundant gas deposits have largely attracted major companies which wish
to forge cooperation with Iran. Nonetheless, a long road lies ahead of Iran to
become an influential player in the petroleum industry. Iran's standing as a
major player in the gas and oil market is undeniable; however, foreign
companies keep watching closely ongoing developments in Iran.
The Atlantic Council 2017 in Istanbul was proof of the potential
comeback of Iran as an influential producer and exporter of oil and gas,
analysts and government officials who attended the event said.
For the time being, one of the most important issues for Iran is to
attract severely-needed foreign investment. Since sanctions have been lifted,
Iran has signed agreements with big companies on various gas projects. Once
again giants like France's Total and Royal Dutch Shell are coming to invest in
Everything was on track before unprecedented challenges arose. US
President Donald Trump, who took office in January, has pursued a different
political approach towards Iran. The managing director and global head of RBC
capital market, Halima Craft, believes that although Iran is a major player in
energy market, further investment in its gas sector depends on the US politics.
“When you look at how the US
sanctions are structured, you can see how they are extraterritorial. The US has
not invested in Iran after 1979. Hence, essentially the US says to foreign
investors, you can invest in Iran or you can access the US capital market,” she
told Iran Petroleum.
Her remarks come true when one takes into account Total's change of
position in the wake of the election of Trump as US president.
However, Iran's Minister of Petroleum Bijan Zangeneh said recently that
the agreement with Total for the development of Phase 11 of South Pars gas
field would be finalized before the current administration of President Hassan
Rouhani bows out.
Potential for Gas Exports to EU
While energy experts like Craft maintain that there is some ambiguity
and uncertainty with regard to foreign investment in Iran's oil and gas
projects, Europeans are more optimistic.
After removal of the sanctions, European companies were first given the
green light for investing in Iran's projects, specifically gas sector.
Since 2015 when Iran and six world powers reached a historic nuclear
deal, dozens of MOUs and agreements have been signed. Companies from Germany,
France and the UK have been keen to invest in Iran. But the desire of exporting
gas to Europe faded very soon due to tough competition in the market. Russia
holds a monopoly on gas supply to East Europe. Some other European countries
have long been purchasing liquefied natural gas (LNG) from Qatar.
Add to this shipment of gas which needs infrastructure. As a result,
Iran preferred to consume its gas domestically.
The chairman of Board of Directors of Ukraine's NAFTOGAZ, Andriy
Koboyev, believes that there is a possibility for Iran to have some
relationships with the Eastern Europe countries in the gas market.
"The gas market is big, while
there is not that much stock constrains from Ukraine, but there are players who
make sure that Iranian gas doesn’t arrive to Europe market. So, if these
impediments can be resolved, Iranian gas can be exported to Europe; but this is
a difficult task," he said.
Meanwhile, Iran is looking for other destinations for its gas.
Ruben Eiras, an advisor in Portugal's Ministry of Sea, said that Iran
and Portugal were more than hopeful about future cooperation.
Iran is investing at Sines Port to commercialize LPG shipments, he said,
adding that the two countries were focusing on infrastructure to distribute LPG
in the African market.
By accomplishing this project, Iran plans to use its flares efficiently.
Eiras speaks on a positive note about gas cooperation between Iran and
Europe, saying, “For what I know, if there is a will and investment capacity in
both parts, this will lead to other cooperation as well.”
Iran great Potential in Renewables
It is imperative to know that besides gas, Iran enjoys potential in
renewable energies. The country intends to increase the share of renewables in
its energy mix up to 5% over the coming three years. Iran also plans to build
Mark Jones is the CEO of EWT, a leading company in building localized
EWT has already installed turbines in the UK, Alaska, and China.
He said an Iranian company has demanded that EWT build turbines in Iran.
This kind of projects is suitable for Iran, Turkey and the Black Sea
countries. There are local industries in Iran and Turkey and their sources of
energy are not used effectively.
"There are a lot of local
industries, and also these countries are poor on cheap energy. Even though
there are a lot of resources but they are used somewhere else. So Iran is up to
use most of its resources," he said.
However, this sector is faced with challenges. In Iran, most projects
are financed by the government while renewable energy pertains to projects
which are handled by the private sector. Therefore, operating such projects in
Iran would need more time.
Jones said however that "once people believe it works, then it will
"So the hardest part is
starting it and make up to 1.2 or 3% of the energy basket purely from renewable
energy," he added.
"It will take time for Iran to
build the infrastructure for the renewable energy. Iran needs investments, new
policies, and people to start the development process," he added.
Courtesy of Iran Petroleum