Discretion Dominates Oil and Gas Exhibition

Energy Desk
A walk through the halls of the 22nd oil exhibition gives the uneasy impression that barely in one year, the international companies have grown noticeably reserved and reticent
More than 800 international companies are present this year.
More than 800 international companies are present this year.

The largest annual convention in Iran's petroleum industry, known as the Iran Oil Show, opened in Tehran on Saturday.

Conspicuous by their absence are the big names such as BP and Total. Under a cloud of caution and uncertainty, the 2017 'show' is the antithesis of last year's exhibit, when oil giants visited post-sanctions Iran with high hopes for investment and collaboration.

According to officials, more than 800 international companies are present this year, an upgrade over the 634 that came in 2016. Many were left out for lack of accommodation.

But you may get a wrong idea about the exhibit if you go only by numbers. A walk through the halls of the 22nd oil exhibition gives the uneasy impression that barely in one year, the international companies have grown noticeably reserved and reticent.

Representatives from Germany's engineering giant Siemens and its largest oil and gas producer Wintershall refused to take questions from the Financial Tribune – the biggest and sole economic newspaper published by the private sector in Iran. Officials from the China National Petroleum Corporation said they "do not do interviews" and executives of Russia's Tatneft and Austria's OMV were not available for comment.

The unsurprisingly guarded approach comes against a backdrop of growing tensionsbetween Tehran and the Trump administration. Last month, US Secretary of State Rex Tillerson sent a disheartening signal to investors and market watchers when he said the US would "review whether the removal of economic sanctions against Iran in January 2016 was in the security interests of his country."

Investors are also biding their time until the presidential elections on May 19 in which the incumbent President Hassan Rouhani, who championed the nuclear deal with world powers in 2015, is seeking a second term in high office.


A representative of Lukoil at the expo told the Tribune that Russia's largest private oil company has currently no business in the country, but "it is in talks with the Oil Ministry and the NIOC for cooperation".

The official spoke on the condition of anonymity because she was not authorized to speak publicly.

Lukoil is among the 29 companies qualified by the government to participate in Iran's upcoming oil and gas tender. The Moscow-based company opened its Tehran office in 2004.

"We want to expand our presence in the Middle East, because it is an important region for us," the official said. She declined to comment when asked if political developments could influence Lukoil's business decisions in Iran.


In contrast with their European counterparts, Indonesian officials appeared more at ease to discuss their agenda in Iran.

Indonesian Ambassador to Tehran Octavino Alimudin was confident that bilateral relations will improve.

"In terms of economy and trade, we had a 33% increase in trade volume with Iran in 2016 year-on-year. But this is just the beginning. This year, we expect higher trade volumes, especially after an agreement to buy liquefied petroleum gas from the NIOC," Alimudin said, referring to Iran's state oil company.

According to the senior diplomat, Indonesia purchased 88,000 metric tons of LPG from Iran in 2016 and the volume is expected to exceed 500,000 tons this year.

The state-owned oil and gas company, which is attending Iran's oil exhibition for the first time, has signed an agreement to study and potentially develop two oilfields in the southern Khuzestan Province.

"Pertamina is ready to invest in Abteymour and Mansouri fields and continue LPG imports," the ambassador said, underlining LPG as the biggest area of trade with Tehran at present.

Alimudin appeared confident that political factors will not affect Tehran-Jakarta relations. "There is no problem in our bilateral relations. The political condition is very conducive and so are economic, social and cultural ties."

Regarding the outcome of the presidential vote, he said, "To us, the election is part of a regular process and that will be a continuation (of ties). We will support whoever will be elected.

He discounted the prospects of renewed sanctions against Iran by the new occupant in the White House.

"We are still assessing their policies toward Iran and in the meantime, we can continue our relations which are very beneficial for us…the JCPOA (Joint Comprehensive Plan of Action) and all other declarations and treaties between Iran and its counterparts give the indication that we can continue our economic relations without being afraid of political factors."

Ida Yusmiati, vice president for Business Initiatives and Valuations at Pertamina, elaborated on the company's aspirations in the Iranian market.

"In August last year, we signed an oilfield study agreement with the NIOC. In February, we completed the studies and handed over our findings and hope to take the agreement to the next step. Pertamina is really keen to invest and operate in Iran, particularly the two oilfields."

Over the past few months Pertamina has discussed terms with the NIOC and its subsidiary, the National Iranian South Oil Company (NISOC) "and we are still waiting for the NIOC plan for the oilfield", Yusmiati said without elaboration.

Pertamina faces competition from Russia's Lukoil and the international Pergas Consortium for Abteymour and Mansouri fields.

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