Fresh Hope for Iran’s Struggling Oil Sector

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Mideast Iran Oil
Vahid Salemi/AP

A new round of negotiations in Vienna, some positive signs, but no inklings of breakthrough underline the very difficult path back to the Iran nuclear deal, nine months after talks resumed amid considerable optimism. Real interest in Iran’s upstream remains, however, indicating that some oil companies have not ruled out a deal being done in 2022 that could see US sanctions eased and foreign investment transform the development of Iran’s prodigious reserves. $80 oil and growing fears about Opec-plus’ production capacity constraints also favor the return of Iranian barrels to the market, especially with US President Joe Biden preparing for midterm elections in November. Tehran is in advanced talks about oil and gas development projects with “mostly Russian companies,” a senior Iranian oil source told Energy Intelligence last month, adding that several deals should be signed under the terms of the Iran Petroleum Contract (IPC) by the end of the current Iranian year on Mar. 20. Since the US withdrew from the nuclear deal in 2018 and reimposed wide-ranging sanctions, Tehran has only signed IPC contracts with local firms whose financial and technological capabilities don't match those of major international players. Russian firms like Gazprom Neft, Rosneft, Lukoil and Zarubezhneft all expressed interest in pursuing opportunities in Iran after the nuclear deal came into force in 2016. State-controlled Zarubezhneft, often referred to as Russia's overseas oil investment vehicle, says it is still eyeing Iran, but it will make a commitment only if sanctions are lifted.

Opec-Plus Supply , Oil Demand, Sanctions
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