Billions of Dollars in Oil Deals Shield Iran From Sanctions

Since most western sanctions on Iran were lifted early last year, Tehran has endeavored to restore its oil exports to a pre-sanction level and attract foreign investments in its energy sector.

Companies are still cautious and not rushing into deals with Iran, but many European, Russian and Asian firms have signed preliminary agreements or letters of intent with Iran that would turn into billions of dollars of investments.

The pledged and potential investments could help Iran cushion the impact of any move by US President Donald Trump to end the nuclear deal with Iran that the US had agreed together with China, France, Germany, Russia, and the UK, Oil Price reported.

While the US has slapped new sanctions on Iranian companies in response to a ballistic missile program and Trump has signed into law an act imposing new sanctions on Iran, some of the biggest European and Chinese oil companies have walked into preliminary deals with Iran’s energy sector.

If the US does step up sanctions or if it were to revisit the nuclear deal, Iran has a cushion of investments from companies from France, China, Russia, the UK and Germany. These countries are crucial to the nuclear accord and their companies have signaled they want continued access to Iran’s market.

 “There is pressure coming from the business establishment in these countries to maintain access to the Iranian market,” Sanam Vakil, an associate fellow at Chatham House’s Middle East & North Africa Program in London, told Bloomberg.

Many of those governments “recognize that marginalizing and isolating Iran is not in their interest”, Vakil added.

Iran aims to sign $50-60 billion worth of oil and gas contracts by March 20—the end of the current Iranian year, Oil Minister Bijan Namdar Zanganeh said last weekend.

Last month, France’s energy major Total signed a contract to develop Phase 11 of the South Pars Gas Field in Iran—the world’s biggest gas field—marking the first Iranian Petroleum Contract with a western major since most sanctions on Iran were lifted.

--- Oilfield, Refinery Projects

Other European companies have signed provisional agreements to explore the potential of various Iranian oil and gas fields. Shell, Total, Petronas and Inpex have submitted studies for the potential development of Iran’s major Azadegan Oilfield, which is shared with neighboring Iraq and estimated to hold 37 billion barrels of oil.

Italy’s oil and gas major Eni signed last month a memorandum of understanding with the National Iranian Oil Company to explore a potential investment in Kish gas field in the Persian Gulf and the third phase of development of Darkhovein Oilfield.

From Asia, South Korea’s SK Engineering & Construction has signed a $1.6-billion deal to revamp Tabriz Oil Refining Company’s 110,000-bpd refinery northwest of Tehran.

Last week, Turkish energy company Unit International, Russia’s Zarubezhneft and Iran’s non-governmental firm Ghadir Investment Company pledged to invest a combined $7 billion to drill at three oilfields and one natural gas field in Iran.