On the verge of an agreement over its controversial nuclear deal, Iran is hoping that sanctions will soon be lifted. The country has the largest gas reserves in the world and could be one of the most powerful players in the global energy market. Bijan Namdar Zanganeh recently met economy minister Sigmar Gabriel in Berlin, the most senior meeting of politicians from Germany and Iran in years.
Handelsblatt: Sanctions have long restricted Iran’s oil production. Now, you want to start exporting oil again. Wouldn’t that put the price of oil under more pressure?
Bijan Namdar Zanganeh: We want to play an important role in securing global energy production, and we want to have a position that’s commensurate with our oil and gas reserves.
You want a 10 percent market share just for oil, and a major share also in gas?
Based on BP’s statistical report 2014, Iran has 33.8 trillion cubic meters of gas which is the largest reserve in the world, bigger than Russia. And we have 157 billion barrels of oil. The sanctions meant we suffered but we came through.
How much did Iran suffer under the sanctions?
We lost nearly 60 percent of our oil exports, we were forbidden from importing western drilling technology. But we replaced a lot of import goods through our own production. After the end of sanctions, we will be as strong as we were before. In three years, we will produce 5.7 million barrels of oil a day – today we produce 3.8 million.
When do you think the sanction will be lifted?
We hope to reach an agreement by the end of June.
Do you think Iran will be able to export oil or do you think the sanctions will be eased in stages?
We want to sell our oil and gas without restriction. We want to use Iran’s money that has been frozen to buy the technology we need for our oil industry. Why should we compromise in the nuclear deal if the oil and finance sanctions aren’t lifted straight away? How would we explain that to our people?
That would put more pressure on the oil price.
The current oil price is bad for everybody, producers and consumers. Producers are unable to invest in future oil fields and that will lead to shortages and then the price will jump again. We need long-term stability for consumers and producers.
What do you think would be the right price for oil?
For both sides, $70 to $75 would be good; and the market should be depoliticized.
Are you referring to Saudi Arabia’s policy of refusing to reduce its oil production in order to drive up the price?
I don’t want to blame it on any particular country. There is a player on the market who is applying pressure to keep the oil price from rising – there is too much politics in the market at the moment.
Iran’s return to the market would surely mean a further fall in the price.
All producers should be ready for Iran to return to the market. Those who produced more during the period when we significantly reduced exports must now scale back their exports. The sanctions were a short-term matter not permanent; they should open the door for Iran. But we won’t wait for them to open the door, if the market is open we will export, it isn’t acceptable for Iran – with the third-largest reserves in the world – to export less oil than Iraq or Kuwait.
Then there's gas. Now Gazprom is turning to China, will Iran find more European customers or maybe build a pipeline?
For our gas industry, the priority is to supply our own economy with more gas and export to neighboring countries – Pakistan, India, Iraq. Asia is more attractive for us.
In Europe, gas prices are too low. Too many permits are required, there are transit agreements and high charges, for a pipeline; Asia is more attractive than Europe, our net profits are too low. Things might be different though with LNG.
Your biggest LNG project ran into trouble.
Yes, the German government stopped Siemens from supplying compressors for our Iran LNG project, and Linde from sending the necessary cooling technology. We hope that will change soon.
When sanctions are lifted, will Iran be open to foreign investment in the oil and gas sector?
We are in talks with international oil companies. Now we are proposing a new model of contract for foreign engagement in Iran’s oil and gas sector, I will present this in September. We want to work with responsible, reliable foreign companies which are technological leaders.
Does that apply to German companies? There’s fear in German industries that after lifting the sanctions the first choice of partner of Iran will be the United States.
In the coming years we will invest $180 billion in our oil and gas industries and especially in developing our petrochemicals industry. German companies have traditionally played a leading role there. Germany has a good image in Iran, especially for environment issues, renewable energies and increasing energy efficiency. But German companies should also get involved in drilling projects.
So German companies still have strong prospects in Iran even though they had to withdraw because of the sanctions?
Yes. Of course we had some difficulty but we don’t want to only live in the past. We are looking to the future and we hope German politicians will do so too. They should approve the German exports which had been held back. We welcome German companies.
What if the sanctions are not lifted, what will Iran do?
Then we will proceed with our projects alone.
Mathias Brüggmann is the head of Handelsblatt's foreign affairs desk, leading the coverage of the Ukraine crisis. To contact the author: [email protected]