Iran riches coveted by big oil after decades of conflict
Extracts from a Bloomberg article published 31 March 2015
Iran riches coveted by big oil after decades of conflict
Now, as Iran and the US enter 11th hour negotiations to reach a nuclear deal and ease sanctions, the West Asian country is emerging again as a potential prize for western oil companies such as BP, Royal Dutch Shell Plc, Eni SpA and Total SA.
The restoration of Western oil investment appears to be a priority for Iran in its nuclear talks with the U.S., U.K, France, Germany, Russia and China. A year ago, the new Iranian President Hassan Rouhani used a speech during the World Economic Forum in Davos to court the European oil majors.
After a two-decade hiatus following the Islamic revolution, Tehran tried to lure back foreign oil companies in the early 1990s.
It first turned to the U.S., reaching a $1 billion deal with Conoco in 1995 that was almost immediately scrapped under pressure from the White House. After a false start with the American group, Tehran signed several deals with European majors including Total and Shell.
Homayoun Falakshahi, Middle East analyst at consultant Wood Mackenzie, said that $50 oil was prompting companies to focus on investments that deliver stronger returns.
“Iran is in much weaker position that it was before,” he said.
“Iran is in much weaker position that it was before,” he said.
BP, Shell and Eni declined to comment. Total didn’t respond to request for comment.
The final hurdle is more subtle, but firmly rooted: a long history of distrust.
For decades, BP’s predecessor, Anglo-Persian Oil Co. dominated Iran’s energy industry and, by extension, almost every aspect of the country’s political and economic life.
When Iran voted to nationalize British oil interests in 1951, London responded first with an oil embargo and later orchestrated a coup with the help of the CIA, codenamed ‘Operation Ajax’, to overthrow Iran’s nationalist Prime Minister Mohammad Mossadegh.
Pivotal Moment
The coup, one of the pivotal moments in the toxic relationship between the west and Iran, succeeded. The nationalization was quickly reversed and a consortium of foreign oil firms, which included the forerunners of BP, Shell, Total, Exxon Mobil Corp. and Chevron Corp., effectively managed the day-to-day of Iran’s oil industry until the early days of what became the Islamic revolution of 1979.
Foreign oil companies and Tehran would need to straighten out that turbulent past that stretches all the way to the Masjid-i-Solaiman oil well. The perception among the foreign oil companies is that the history would be put aside. Sultan, the former head of Kuwait Petroleum Corp., said Iranian leaders would play along too.
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The TRUTH will set you FREE.
By David Ljunggren
