As the June 30 deadline for a nuclear deal between Iran and the P5+1 approaches, the world is eagerly following the fortunes of official figures in Tehran. One member of Rouhani’s cabinet, the Oil Minister Bijan Namdar Zangeneh, is arguably more vested than anyone else in hoping for a positive result from the talks.
While Rouhani and his foreign minister Zarif capture most of the media attention in Iran, it is Zangeneh as one of the principal architects who is tasked to prepare the ground for the rehabilitation of the damaged, yet strategically vital Iranian energy sector. Zangeneh is in his job today because he is widely seen to be Iran’s top oil man. Given that oil exports, and the expanding natural gas sector, are the mainstay of the Iranian economy, his stewardship will be critically important as long as he can stay in the job.
Ambitious Goals, Steep Climb
Once back in the oil ministry, where he had last served as a minister between 1997-2005, Zangeneh made top-level personnel changes. Then he set out to make his ministry a priority to be cultivated for the long-term health of the Iranian economy.
“The oil industry needs financial resources,” he insisted, adding that Iran has to face the dire consequences for the economy unless the grip of international sanctions is removed.
At one point the world's second largest exporter of oil behind Saudi Arabia, Iran's production has fallen to about 2.7 million barrels a day, down from around 4.2 million barrels a day in 2010. According to Zangeneh, sanctions have cost Iran 60 percent of its export capacity. Other reports measure the sanctions-related loss at about 20 percent of the country’s GDP.
Nonetheless, Zangeneh speaks mostly in upbeat terms. At the recent 2015 Energy Security Summit in Berlin, he said Tehran is planning to increase its oil production to 3 million barrels per day once sanctions are terminated. The aim to regain what Iran has lost due to sanctions is understandable, but the financial and infrastructural challenges are on an intimidating scale.
Investment Needs
The official says the country plans to invest $180 billion to renovate its oil, gas and petrochemical industries by 2022. Such targets can only be met should Iran reach a nuclear deal and open the door for foreign investment. The good news is that with some 9 percent of the world’s oil reserves and 18 percent of its natural gas, Iran is hard to ignore for any energy company if the price of doing business with it is manageable.
Meanwhile, it remains to be seen if other regional oil producers have any sympathy for Zangeneh’s agenda. During the 20th International Oil, Gas, Refining and Petrochemical Exhibition held in Tehran in early May, Zangeneh asked the other oil producers to allow Iran regain its lost market share. It is, in Zangeneh’s words, Iran’s “right” to be able to do so.
Still, he has been mostly subtle in criticizing those countries that have “flooded the market with crude products” and has kept the door open for dialogue. Like his counterpart in the Iranian foreign ministry, Zangeneh is particularly focused on Saudi Arabia.
It is in Riyadh where the Iranians face the sharpest disagreements over oil price policy inside OPEC. And yet the rewards are also greatest here in the event of some kind of understanding between the two regional rivals. For now, Zangeneh can restructure the industry at home, attend international energy conferences and prepare enticing contracts for potential foreign investors.
