Right before the highly anticipated presidential election in Iran, UK energy giant BP released its Statistical Review of World Energy and classified Iran’s natural gas reserves as the biggest in the world — a fact that undoubtedly is of great interest to all energy companies.
But since the Iran Libya Sanctions Act of 1996 and through a series of increasing sanctions, Western oil and gas companies have found it more and more difficult, if not near impossible, to do any kind of business in Iran, although the country has been trying hard to attract foreign investment into the South Pars region that it shares with Qatar. BP also upgraded Iran’s oil reserves, but oil and gas deposits, no matter how large they may be, are completely meaningless to both Iran as well as to energy companies, said Mehrdad Emadi, senior research consultant at UK firm Betamatrix, so long as sanctions are still in place.
Iran is badly in need of investment, of course, since for years, no real money has come into the most important sector of the Iranian economy.
“Things came to a standstill since most of the large oil companies like Total more or less exited Iran and the equipment that’s there is semi-obsolete,” Emadi said. “But the output that could come from Iran’s reserves is huge and clearly represents a huge opportunity for investment and for any companies that can come in and help develop resources, the potential for doing business is huge, since the other industries that support the oil and gas sector also need to be developed.”
Emadi is one of many hoping that the victory of Hassan Rowhani in the recent Iranian election will open a brand new chapter in the fractious relationship shared by Iran and the West, the US in particular, over the past decades, and eventually result in an easing of the harsh sanctions that have been imposed on Iran.