Germans Willing to Invest in Iran Oil Sector
German companies have expressed their willingness for involvement in oil and gas fields’ exploration and drilling projects in Iran. To that effect, they have started talks with National Iranian Oil Company (NIOC) officials.
Iran’s newly appointed ambassador to Germany, Ali Majedi, is a former deputy petroleum minister for international affairs. He said talks have started between NIOC and several oil drilling companies. So far, these talks have not led to any official outcomes.
German companies have long been present in Iran’s industrial projects although they have faced ups and downs in recent years.
The latest cooperation between Iran and Germany in the petroleum industry was in exploration of shale oil reserves in Zagros region.
Recently, a German company signed an MOU with Iran’s Research Institute of Petroleum Industry (RIPI) for producing fuel from heavy crude and oil residues. The technology for the production of this kind of fuel is expected to be indigenized in Iran. The content of oil fields in Iran is changing from light oil to heavy oil; therefore, acquiring technology to produce fuel from heavy oil is important for the country.
Gholam-Hossein Shafei, head of Iran Chamber of Commerce, recently met with a German delegation in Tehran. After the meeting, he said Iranian and German companies are to broaden their energy cooperation.
“Cooperation in the energy sector and development of small-sized and different industries are among plans we can follow up on with Germans because this country has good experiences in this sector,” he said.
Iran’s oil and gas industries are so attractive that oil giants cannot resist their desire for investment. That is why they are in talks with Iran’s Petroleum Ministry and NIOC.
Petchem Cooperation Resumed
The German delegates also met with the managing director of National Petrochemical Company, Abbas Sha'ri-Moqaddam. Both sides expressed willingness for the resumption of cooperation after the lifting of sanctions.
“The two countries are preparing for renewed cooperation immediately after sanctions are lifted,” said Sha'ri-Moqaddam.
He highlighted the high quality of German products used in Iran’s petrochemical industry in recent years, saying: “It is now in the interest of the economy of both countries to continue cooperation in the oil, gas and petrochemical sectors.”
The head of German delegation expressed happiness with the renewed presence of German companies in Iran, saying this visit can be a start for the removal of impediments ahead of petrochemical cooperation between the two countries.
He said Iran, which sits atop the world’s largest hydrocarbon reserves, is among Germany’s top target markets.
Representatives from more than 20 renowned German petrochemical companies introduced their products and discussed challenges to their return to Iran’s petrochemical industry.
$62b Gas Investment Opportunity
The managing director of National Iranian Gas Company (NIGC) has said that Iran’s gas industry needs $62 billion in investment for financing the required infrastructure to boost gas production.
Hamid-Reza Araqi said Iran needs to double gas production to 330 bcm a year in three years, adding that the country’s gas management must change.
He said demand for gas has doubled, big industrial customers have joined gas network, the number of houses consuming gas is raising and gas is making up a 70% share in Iran’s energy mix. Araqi added that the necessity of cooperation with leading international companies to acquire technology and entry into global gas trade are among challenges requiring planning.
The official said all gas projects envisaged in the country are facing financial challenges.
Araqi said NIGC is tasked with managing gas supply in the country, renew gas industry structure and make efforts for active presence in global gas trading opportunities.
“NIGC is an organization in charge of national security and financial interests. Therefore, it should build trust for achieving its goals,” he said.
Iran Petroleum Minister Visits South Pars
Iran’s Petroleum Minister Bijan Namdar Zangeneh traveled to South Pars gas field and visited phases 15&16, 12 and 17&18 of this offshore giant gas reservoir.
During his tour, he was briefed about the physical progress of these development phases.
“Development of five prioritized phases is on the agenda of Petroleum Ministry and we hope to be able to realize most of our objectives by the end of the [current calendar] year,” said the minister.
“Accelerating the completion of South Pars phases is important and we will reach good results with further and more effective efforts,” added the minister.
Four terrains of sweetening in the refineries of phases 12, 15&16, as well as the offshore platforms of phases 16 and 18 were recently launched.
Oil Price Fall and Mid-Term Interests
Iran’s President Hassan Rouhani said the fall in oil prices could guarantee Iran’s mid-term interests.
“Oil price slide can be followed by mid-term interests,” Rouhani said as he submitted a draft budget for the next calendar year to the parliament.
“One of the most significant economic chapters of the proposed budget of the government has been to increase non-oil exports whose growth in recent months helped the economy get out of stagnation,” he said.
The president added that non-oil exports will have a significant share in the country’s economic growth rate in the future.
Statistical data show that non-oil exports reached $5.31 billion at the end of the eighth month of the calendar year, up 7.19 percent year-on-year, Rouhani said and expressed hope that Iran’s non-oil exports would exceed $50 billion by March next year.
He said National Development Fund of Iran (NDFI) is expected to deposit $1 billion with Exports Development Bank in order to help exporters in marketing.
He said that the Central Bank of Iran (CBI) is tasked with depositing $200 million in foreign banks for the issuance of letters of guarantee for Iranian exporters. The CBI is also assigned to provide support for exporters of technical and engineering services.
Rouhani said his administration’s plan for leading the country out of stagnation mainly focuses on boosting non-oil exports and strengthening the power of banks in granting facilities to business activities.
With regards to oil prices, the president said: “Such a decline has been unprecedented in recent decades. Regardless of the root of the present conditions and how long they will last, we concluded that it is necessary to draft next year’s budget with prudence.” He said that the present circumstances “create new threats and opportunities for our economy.”
“On the one hand, our revenues will decline in the short run and the government’s budget which depends on oil sales will face pressure, but on the other hand, it could create conditions in favor of mid-term interests,” said Rouhani.
“Our economy should move towards development of non-oil exports. Oil price slide provides a new opportunity to accelerate this move. In order to make up for reduced hard currency revenues gained from oil exports, non-oil exports should be developed,” he said.