Official Dismisses US Negative Impact on Iran Oil Sector

A040900311.jpgTEHRAN (FNA)- Iran has endured US sanctions for decades and its strategic oil industry will not be beaten by them now, a top Iranian oil official said on Sunday.

The pain is not just Iran’s as oil at a record of $117 a barrel has focused attention on the need to extract as much from the ground as possible.

“It will cost us. There is no doubt our projects will be affected,” Akbar Torkan, head of planning affairs at the National Iranian Oil Company, told Reuters.
“But it will not stop our projects for development and our production continues to the market.”

Starting last year, the US Treasury Department has banned Americans from doing business with a number of Iranian state banks and other firms because of alleged involvement in financing nuclear and missile technologies.

The US has never presented any corroborative evidence to substantiate its allegations against the Islamic Republic.

Torkan, a former defense minister, said OPEC’s second biggest producer was expert in coping with isolation if such a thing happens to Iran.

During the 1980-88 Iran-Iraq war, he was head of Iran’s Defense Industries Organization, when all its defense equipment required American spare parts that were blocked by a US-led arms embargo.

But its US-made F-14s have carried on flying as Iran overcame the immense difficulty of maintaining its fleet and the same thing happened with regard to other Iranian weaponries of western origin as Iran started designing and manufacturing its needed spare parts, tools and equipment and could reach home-grown technologies in many fields.

“We managed to be able to maintain our capabilities…. Even after 30 years of sanctions, all our F-14 aircrafts are flying and operational. This is the result of the sanctions that they have done.”

The financial sanctions place Iran’s oil industry under the same kind of pressure.

“It will create some costs for us,” said Torkan, but he said the oil industry was “stronger than during war-time” and well placed to overcome obstacles.

Asked how, he said he could not tell that to an international newswire.

“This is news for every newspaper… They will try again to close the ways that we are working,” he said on the sidelines of talks between energy producers and consumers in a plush hotel near the Vatican.

The second biggest oil exporter in the Organization of the Petroleum Exporting Countries, Iran is shipping at a steady rate of around 2.4 million barrels per day to international markets.

It has been receiving payment from clients almost everywhere except the United States, which has banned imports of Iranian crude since 1995, even though buyers of crude in theory have to rely on major international banks to guarantee their credit.

“Inter-banking activities are a problem and we are trying to solve it,” Torkan said, adding that there were ways to circumvent the strictures.

“Those who are professional enough …. some of the big banks … not formally and directly, but they have some other commercial solutions that can work — with more cost – but they can work.”

At stake are billions of dollars in commission for banks, as well as the development of the world’s second biggest reserves of oil and gas.

“When everybody in the world is focusing on security of supply for the oil market, it’s not reasonable to force the second biggest reserve holder not to develop the fields that everybody in the world needs,” Torkan said.

Although US companies are staying away, other international oil firms are working in Iran and are in talks on future projects.

International oil executives were pressing for an audience with the large Iranian delegation at the International Energy Forum taking place in Rome until Tuesday.

“They have told us ‘we are under pressure,’ but they have not left,” said Torkan.

Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in the country but not getting into big deals that could endanger their interests in the US.

But after they witnessed that their absence in big deals has provided Chinese and India companies with excellent opportunities to signing up to an increasing number of energy projects and earn billions of dollars, many western firms are now losing reluctance to invest or expand work in Iran.

Oil giant Total stressed last week that the French company cannot afford to lose deals with Iran as it is one of the largest oil producers in the world.

In an interview published on Thursday, Total’s Chief Executive, Christophe de Margerie, told Liberation, “Iran is one of the largest oil-producing countries in the world. And in terms of gas, we are far from having made all the discoveries possible. We cannot afford to be absent.”

De Margerie explained that despite the global political situations, oil and gas are not “stop and go” industries with investments covering 20 to 30 year periods. He cited Libya as an example: “It was difficult at times. If we had left, there would never be an income.”

“There is a general decline in oilfields. If we don’t move we’re heading for a real problem. And the decision makers, who have environmental problems in mind, seem to forget the question of access to energy,” he warned.

The Total Chief Executive Officer also said in February, “We have not burnt our bridges with Iran … We will find solutions to maintain our long-term presence.”

Norwegian energy group StatoilHydro said on Tuesday it has planned for a long-term presence in Iran as the country holds huge oil and gas reserves.

“Our main objective is to fulfill our commitments pertaining to phases six, seven and eight of the South Pars gas development projects, Anaran and Khorramabad perfectly and then take into consideration results (of the projects),” press tv quoted Jan Helge Skogen, Statoilhydro’s managing director in Iran, as saying.

“We seek long-term presence in Iran since Iran possesses massive oil and gas reserves, but at present, we are focusing on StatoilHydro’s three current projects and we are ready to mull over new investments,” he added.

According to the StatoilHydro, the company is an offshore operator for development of phases six to eight of the South Pars gas field. The company agreed to conduct a seismic survey during 2007 and to drill exploration wells over a four-year period in addition to gathering additional seismic data in Khoramabad.

American oil companies have also displayed eagerness to attend in Iranian projects.

As a first step several US oil companies participated in the 13th International Oil, Gas and Petrochemical Exhibition (IOGPE) in Tehran, which started in Tehran on Wednesday.

Analysts believe that participation of foreign companies from 30 countries is proving their opposition to the US sanctions. Iranian officials also share the same view.

“This indicated that they are disregarding pressures imposed by the world powers to isolate Iran from economic arenas,” Iranian Deputy Minister for Oil Sekhavat Asadi told Iran’s Petroenergy Information Network (PIN).

“It is important first of all from the (oil) industry point of view, because with more than 4 million bpd, Iran is an oil-producing country which cannot be dismissed by any company – sellers of equipment, sellers of services and so on,” Dr. Manouchehr Takin, a senior petroleum upstream analyst with the Centre for Global Energy Studies in London, told The Media Line.

“From the political point of view, I think the fact that politics has not hindered or stopped the exhibition is a significant point. This means that business takes priority over politics,” added Takin.

According to the US Department of the Treasury’s Office of Foreign Assets Control, it is forbidden for “US persons to trade in Iranian oil or petroleum products refined in Iran.”

Americans are also not allowed to finance such trading, and they “may not perform services, including financing services, or supply goods or technology, that would benefit the Iranian oil industry.”

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