Iran, Entry Gate to Mideast Oil
By Jaafar Pour-Farjoudi
Iran is an attractive market for foreign investment. Iran’s petroleum industry has extensive plans for developing upstream and downstream sectors. Implementation of these plans requires big investment in different fields and to that effect international companies are vying for chances of presence in Iran.
The Italian city of Bergamo held the first conference and exhibition on industrial valves on May 27 and 28. The exhibition, which is projected to be held every two years, is aimed at highlighting the industrial capabilities of Italian companies manufacturing industrial valves. This exhibition provides the ground for CEOs, experts and technicians to get acquainted with the latest industrial achievements.
On the sidelines of the event, Iran Petroleum talked to Maurizio Brancaleoni who was the chief organizer of Industrial Valve Summit (IVS).
Q: As you know Iran and Italy have long cooperated in oil and gas projects. Before anything else, I would like to know your view about future cooperation with Iran?
A: Iran and Italy hold good memories of mutual cooperation. As an Italian, I personally like to see Iran’s relations grow not only with Italy but also with all countries. I think that the idea of restricting Iran in recent years has been a mistake and it would be wrong to isolate Iran in the international community and impose restrictions on its relations with other countries. In my view, Iran-Italy relations should grow in the future. This point is important not only for governments but also for the future of youths in both countries. The youths who plan to get involved in production in coming years need the development of this cooperation. The future of the world is in the hands of youths and we have to make sure that they will go a safe way from school to university and workplace and that they would not repeat the past mistakes. The governments should work out plans such that all youths would be able to see a bright future. Meantime, we should take into consideration our own international responsibilities. There are two billion people suffering thirst and hunger. We have to work together to put an end to this situation.
Q: How can Italian industrialists help Iranian companies in development?
A: I remember well that Iranian and Italian companies have long had extensive cooperation in different sectors including oil, gas, refining, petrochemical and electricity projects. All problems started after sanctions were imposed on Iran over it nuclear dossier. Of course, we think that the sanctions slapped on Iran have been very harsh and they constitute a big mistake. Regardless of the views of European people, world powers have unilaterally imposed tough restrictions and now I think that the time has come for us to destruct the walls erected between us. Iran and Italy should return to their good old days and the flow of capital, science and technology; and information should be restored between the two countries. We have to exchange what we have at our disposal. For that purpose, we need to develop new methods for cooperation. For instance, we are now ready to manufacture sophisticated industrial valves in Iran with the help of Iranian companies. Italy has powerful industrial companies and universities that can cooperate with Iranian universities and companies. We view Iran as the entrance gate into the Middle East market. We think that we can look at Iran as a base for manufacturing and supply of industrial valves in the Middle East.
Q: One criterion in selecting industrial commodities for projects is the factor of price. Due to their low-price products, Chinese companies have outperformed the European firms. What do you think of that?
A: In my view, the factor of price should be assessed based on the quality and durability of the product. It would be highly significant to know the length of useful life of an industrial valve and its durability. Then the issue of price could be considered. Iran’s petroleum industry has always demanded the highest quality for the commodities it needs. Petroleum industry is very sensitive and nothing risky should be done in this regard. Due to its ambitious oil, gas, refining and petrochemical development projects, Iran is a potential market for high-quality equipment supply. Italian companies manufacturing industrial valves are already vying with French, German, American, Indian and Chinese companies for presence in Iran’s market. But I wonder why Iranian companies have no share in their own market. We have devised plans to that effect and we can help empower Iranian companies to manufacture high-quality products required for the petroleum industry. In this regard, Tehran Oil Show is a good opportunity for the development of ties between Iran and Italy. We were already close to manufacturing industrial valves in Iran. Some customs problems had slowed down work which came to a total halt following the imposition of sanctions. However, we are now ready to resume cooperation with Iran.
Q: How can Iranian and Italian companies cooperate with each other?
A: We have to work honestly to have a win-win result. The advantage we can provide to Iran is to transfer our centuries-old experience in industrial valve manufacturing to this country. But we also expect Iran to have professional manpower for manufacturing. I assure you that we will have the best cooperation with Iran and our joint products could be exported to different markets. Of course Iran should prepare the required conditions and ground for cooperation; and the past mistakes should not be repeated. For us, API and MMS are acceptable standards in the world and they are applicable for the manufacturing of commodities required for the petroleum industry.
Iran used to be one of the best countries in attracting investment. We still believe that Iran is one of the most secure countries in the Middle East for investment. However, the important point is that the foundation for this cooperation should be laid before the end of sanctions imposed on Iran so that we would immediately start work after sanctions are lifted. We want to cooperate with Iran in practice and not just in words. We try to show in practice that unlike other countries that promise cooperation, we are serious in joint activity with Iran. If Iran opens a window to us we will open our doors to Iran. In car races, Ferrari always reaches the finish line faster than Mercedes Benz!
Q: What do you think of oil price slump and the negative impacts of low oil prices on investment in development projects?
A: The obvious point in this regard is that the oil price would never return to above $100 ,because Saudi Arabia has in the past one year moved to have prices cut in a bid to drive US and Canada shale oil out of market. In my view, that was a strategic attempt for eliminating high oil production from market. But at the same time, the companies with high-quality and costly production have also suffered. This decision could prove to be useful in the short-term, but it would inflict serious damage on development investments in the long-term. Now, even Chinese companies have realized that high-quality commodity manufacturing costs high; therefore they have increased the price of their commodities.
Q: As you know, Iran has extensive plans for gas production mainly from South Pars gas field. How can Italian companies cooperate with Iran to that effect?
A: Based on our studies, if Iran is not the first market for commodities related to sour gas production, it will certainly be the second. Due to their specifications and acidity corrosion, sour gas production equipment needs high quality and sophisticated technical knowhow. Italian companies are experienced in this regard, but we have first to get familiar with the technical specifications of equipment needed for Iran. Therefore, before starting cooperation, we need to hold meetings with Iranian engineers and experts active in these fields. We are hopeful of cooperation with Iran.
Q: What do you think of security of investment in Iran’s energy sector?
A: In the past and before the sanctions were imposed, Iran was one of the best countries for investment particularly in the energy sector. And I think that this potential still exists and after the lifting of the sanctions, Iran will definitely be one of the most secure countries for investment.